Explore BrainMass
Share

Explore BrainMass

    Customer-Profitability Analysis for Five Designated Customers

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    5 66
    1. Caltex computer, operating income: $14,000

    FiberCom, Inc. manufactures fiber optic cables for the computer and telecommunications industries. At the request of the company vice president of marketing, the cost management staff has recently completed a customer-profitability study. The following activity-based costing information was the basis for the analysis.
    Customer-Related Activities Cost Driver Base Cost Driver Rate
    Sales activity Sales visits $2,000
    Order taking Purchase orders 400
    Special handling Units handled 100
    Special shipping Shipments 1,000
    Cost-driver data for two of FiberCom's customers for the most recent year are:
    Customer-Related Activities Caltex Computer Trace Telecom
    Sales activity 8 visits 6 visits
    Order taking 15 orders 20 orders
    Special handling 800 units handled 600 units handled
    Special shipping 18 shipments 20 shipments
    The following additional information has been compiled for FiberCom for two of its customers, Caltex Computer and Trace Telecom, for the most recent year:
    Caltex Computer Trace Telecom
    Sales revenue $380,000 $247,600
    Cost of goods sold 160,000 124,000
    General selling costs 48,000 36,000
    General administrative costs 38,000 32,000
    Required:
    1. Prepare a customer-profitability analysis for Caltex Computer and Trace Telecom. (Hint: Refer to Exhibit 5.13 for guidance.)

    Exhibit 5.13
    Customer-Profitability Analysis for Five Designated Customers: Patio Grill Company

    2. Build a spreadsheet: Construct an Excel spreadsheet to solve requirement (1) above. Show how the solution will change if the following information changes: Trace Telecom's sales revenue was $250,000 and Caltex Computer's cost of goods sold was $155,000.

    © BrainMass Inc. brainmass.com October 9, 2019, 10:55 pm ad1c9bdddf
    https://brainmass.com/business/accounting/237240

    Attachments

    Solution Summary

    The solution examines customer-profitability analysis for five designated customers for Caltex Computers and Trace Telecom.

    $2.19