1. Sales visits 2. Product adjustments 3. Phone and email contacts . Promotion a
ID: 3144596 • Letter: 1
Question
1. Sales visits 2. Product adjustments 3. Phone and email contacts . Promotion and enterteinment evenss Number of events Activity Cost Driver Cost per Unit of Activity Number of vi: days Number of adjustments,500 Number of callsicontacts $1,200 150 1,500 Financial and activity data on the five customers follows (Sales and Gross Profit data in millions) Customer Sales Gross Profit Activity1 Activy 2 Activity 3 Activity 4 $17.00 12.00 3.00 4.00 106 2.40 130 36 10 0.80 19 10 250 139 5 10 $30.00 57.80 238 20 In addition to the above, the sales staff used the corporate jet at a cost of $800 per hour for trips to customers as follows: Customer#1 24 hours Customer #2 36 hours Customer #3 5 hours Customer #4 0 hours Customer #5 6 hours The total cost of operating the airplane is included in general and administrative expense; none is included in selling and customer support costs. a. Prepare a customer profitability analysis for Rogers Aeronautics that shows the gross profits less all expenses that can reasonably be assigned to the five customers. Enter figures as complete numbers (with all zeros). For example. 1 million is 1,000.000. Do not use rnegative signs with any answers. Round return on sales to one decimal place. (Ex: 10.496)Explanation / Answer
a. Prepare a customer profitability analysis for Rogers Aeronautics that shows the gross profits less all expenses that can reasonably be assigned to the five customers.
Allocatiion of Sales and Support Activity to customer
b. Now assuming that the remaining general and administrative costs are assigned to the five customers based on relative sales dollars, calculate net profit for each customer
Figures in $ Customer 1 Customer 2 Customer 3 Customer 4 Customer 5 Total Sales 19,000,000 14,000,000 5,000,000 6,000,000 5,000,000 49,000,000 Cost of goods sold 15,200,000 11,200,000 4,000,000 4,800,000 4,000,000 39,200,000 Gross profit 3,800,000 2,800,000 1,000,000 1,200,000 1,000,000 9,800,000 Less expenses - Sales commissions 5% of sales 950,000 700,000 250,000 300,000 250,000 2,450,000 Sales visits 127,200 156,000 62,400 40,800 19,200 405,600 Product adjustments 34,500 54,000 15,000 9,000 7,500 120,000 Phone and other remote contacts 33,000 53,100 27,000 20,700 15,600 149,400 Promotion and entertainment 123,000 99,000 111,000 27,000 15,000 375,000 Corporate jet expense @$800 per hour 19,200 28,800 4,000 - 4,800 56,800 Total Expenses 1,286,900 1,090,900 469,400 397,500 312,100 3,556,800 Customer profitability 2,513,100 1,709,100 530,600 802,500 687,900 6,243,200 Customer return on sales % (Profit/sales*100) 13.2 12.2 10.6 13.4 13.8Related Questions
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