39. Ethereal Company sells a product used in tivity areas: many manufacturing pr

Question

39. Ethereal Company sells a product used in tivity areas: many manufacturing processes. The sales activity involves four ac- Order taking Sales visits Delivery vehicles Special runs The following customer information is given: $100 per purchase order $50 per visit SI per delivery mile $300 per run 100,000 80,000 S50 $48 20 Units sold $50 $45 30 60,000 $50 S50 10 List price Actual sales price Number of purchase orders Number of sales visits Number of deliveries Miles traveled per delivery Number of special runs 10 40 20 What is the profitability of customer B?

Explanation / Answer

SOLUTION

Sales = 80,000 * $48 = $3,840,000

Overheads -

Purchase orders - 20 * $100 = $2,000

Sales visits - 5 * $50 = $250

Deliveries - 8 * 5 * $1 = $40

Special runs - 0 * $300 = $0

Profitability = $3,840,000 - $2,000 - $250 - $40 - $0 = $3,837,710

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