Figure Eight is a distributor of pharmaceutical products. Its ABC system has five activities: (Click the icon to view th

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Figure Eight Is A Distributor Of Pharmaceutical Products Its Abc System Has Five Activities Click The Icon To View Th 1 (9.23 KiB) Viewed 49 times

Figure Eight is a distributor of pharmaceutical products. Its ABC system has five activities: (Click the icon to view the activities.) Rick Flair, the controller of Figure Eight, wants to use this ABC system to examine individual customer profitability within each distribution market. i (Click the icon to view additional information.)
Activity Area 1. Order processing 2. Line-item ordering 3. Store deliveries 4. Carton deliveries 5. Shelf-stocking Cost Driver Rate in 2017 $42 per order $6 per line item $47 per store delivery $2 per carton $20 per stocking-hour
He focuses first on the Ma and Pa single-store distribution market. Using only two customers helps highlight the insights available with the ABC approach. Data pertaining to these two customers in August 2017 are as follows: Houston Pharmacy Dallas Pharmacy Total orders 16 Average line items per order 10 Total store deliveries Average cartons shipped per store delivery Average hours of shelf-stocking per store delivery Average revenue per delivery Average cost of goods sold per delivery S 69 10 9 23 0.5 2,650 $ 2,200 $ 7 20 5 22 0.75 1,950 1,700
Requirement 1. Use the ABC information to compute the operating income of each customer in August 2017. Comment on the results and what, if anything, Flair should do. (Round your answers to the nearest whole dollar. Use parentheses or a minus sign for operating losses.) Houston Pharmacy Revenues Cost of goods sold Gross margin Operating costs Operating income(loss)