A & B Pty Ltd provides repair services for handphones and laptops for three major retailers. The service involves manufa

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A & B Pty Ltd provides repair services for handphones and
laptops for three major retailers. The service involves
manufacturer warranty repairs and extended warranty repairs on all
major brands of handphones and laptops on the market.
The company’s repair costs consist of the cost of technicians
and equipment that are traceable to each customer, and a pool of
office overhead. Until recently, management at the company
estimated customer profitability by allocating the office overhead
to each customer based on share of revenues.
The management accountant at that time reported the following
results for the financial year ended 30 June 2022:
X
Y
Z
Total
Revenues
585,000
485,000
724,500
1,794,500
Technician and equipment cost
409,500
393,750
506,250
1,309,500
Office overhead allocated
65,000
55,000
75,000
195,000
Operating profit
$110,500
$36,250
$143,250
$290,000
The company's newly appointed management accountant notes that
office overhead is more than 10% of total costs, so he spends two
weeks analysing the consumption of office overhead resources by
customer. He compiles the following information:
Activity:
Service call handling
$105
Per service call
Parts ordering
$100
Per parts order
Invoicing and collection – reminder letters
$70
Per bill
X
Y
Z
Number of service calls
225
300
400
Number of parts orders
80
250
90
Number of reminder letters
45
100
185
Using the new information that the management accountant has
compiled above, analyse customer-level operating profit and
cumulative customer-profitabiility as follows:
a) Calculate profitability by customer showing detail
line-by-line
b) Create a customer ranking table
c) Create some useful tables and visualisations of your data