Required What is the excess of gross margin over customer costs for each category of customer? Write a short memo that evaluates customer profitability. a. b.
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Carmel Company has a frequent buyer program for its customers, where the customers can attain an "elite" level based on the number of orders and the total revenue of the orders. There are two
elite levels: Platinum and Titanium. The benefits of elite membership include discounts and access to special customer service representatives who can resolve problems. The company has one full time customer representative per 200 Titanium customers and one full-time customer representa tive per 2,000 Platinum customers. Customer representatives receive salaries plus bonuses of 2 percent of customer gross margin. Carmel spends 70 percent of its promotion costs on Titanium customers to encourage their loyalty
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- Rutland Business Services (RBS) provides miscellaneous consulting and services to local businesses. In August, RBS worked for three clients. It worked 270 hours for Selden Contracting, 170 hours for Moenhart Insurance, and 230 hours for Englewood Medical Center. RBS bills clients at $560 an hour; its labor costs are $145 an hour. A total of 750 hours were worked in August with 80 hours not billable to clients. Overhead costs of $75,000 were incurred and were assigned to clients on the basis of direct labor-hours. Because 80 hours were not billable, some overhead was not assigned to jobs. RBS had $61,000 in marketing and administrative costs. All transactions were on account. Required: a. What are the revenue and cost per client? b. Prepare an income statement for August. Complete this question by entering your answers in the tabs below. Required A Required B What are the revenue and cost per client? Revenue Labor Overhead Margin Selden Contracting Moenhart Insurance $ Englewood Medical…Assume a Potbelly's restaurant has the following information available regarding costs at represent- tive levels of monthly sales: Monthly sales in units 5,000 8,000 10,000 Cost of food sold. $10,000 $16,000 $20,000 Wages and fringe benefits.........................4,200 4,320 4,400 Fees paid delivery help...........................1,100 1,760 2,200 Rent on building. 1,100 1,100 1,100 . 900 900 900 Utilities Depreciation on equipment... Supplies (soap, floor wax, etc.).. 1,700 1,700 Total........ .800 920 1,000 ...........1,700. ..250 340 400 Administrative costs..... $20,050 $27,040 $31,700 Required a. Identify each cost as being variable, fixed, or mixed. b. Use the high-low method to develop a schedule identifying the amount of each cost that is mixed or variable per unit. Total the amounts under each categorye. what is the estimating equation for total cost based on number of clients implied by these results 1. Total cost= $75,500 + ($436.80 x number of clients) 2.Total cost= $75,500 + ($403.20 x number of clients) 3. Total cost= $75,500 + ($50.40 x number of counseling hours)
- Jilrn/takeAssignment/takeAssignment Main.do?invoker=&takeAssignmentSession Locator=&inprogress=false eBook Show Me How Contribution Margin Ratio a. Young Company budgets sales of $1,280,000, fixed costs of $66,200, and variable costs of $294,400. What is the contribution margin ratio for Young Company? % b. If the contribution margin ratio for Martinez Company is 52%, sales were $682,000, and fixed costs were $262,430, what was the operating income? Check My Work 2 more Check My Work uses remaining, B Previous NextJuppose m.. منظومة العمل عن. . . Return to Blackboard Managerial Accounting, 8e Help | System Announcements CALCULATOR Exercise 193 Cunningham Industries reported actual sales of $2,000,000, and fixed costs of $540,000. The contribution margin ratio is 30%. Compute the margin of safety in dollars and the margin of safety ratio. Margin of safety in dollars % Margin of safety ratio Click if you would like to Show Work for this question: Open Show Work SAVE FOR LA Question Attempts: 0 of 1 usedProblem 5 (Linear Cost Approximation) Tita Lopez, managing director of the ABS Consulting Group, is examining how overhead costs behave with variations in monthly professional labor- hours billed to clients. Assume the following historical data: Professional Labor-Hours Billed to Clients Total Overhead Costs P340,000 400.000 435,000 477,000 529.000 587.000 3,000 4,000 5,000 6.000 7,000 8.000 Required: 1. Compute the linear cost function, relating total overhead cost to professional labor-hours, using the representative observations of 4,000 and 7,000 hours. component of the cost function represent the fixed overhead costs of the ABS Consulting Group? Why? Plot the linear cost function. Does the constant What wouid be the predicted total overhead costs for (a) 5,000 hours, and (b) 8.000 hours using the cost function estimated in requirement 1? Plot the predicted costs and actual costs for 5,000 and 8,000 hours. 3. Lopez had a chance to accept a special job that would have boosted…
- Assume a company's activity-based costing system includes three activities with the following activity rates: Activity Cost Pool Activity Rate Travel $ 2 per mile driven Deliveries $ 50 per delivery Customer service $ 22 per phone call Two of the company's many customers include Customer A and Customer B. These two customers consumed the company's activities as follows: Total Expected Activity Customer A Customer B Travel (number of miles driven) 300 250 Deliveries (number of deliveries) 15 5 Customer service (number of phone calls) 20 12 If the company earned $1,130 in revenue serving Customer B, then what is the customer margin for this customer? Multiple Choice $96 $156 $116 $136Assume a company’s activity-based costing system includes three activities with the following activity rates: Activity Cost Pool Activity Rate Travel $ 2 per mile driven Deliveries $ 50 per delivery Customer service $ 22 per phone call Two of the company’s many customers include Customer A and Customer B. These two customers consumed the company’s activities as follows: Total Expected Activity Customer A Customer B Travel (number of miles driven) 340 250 Deliveries (number of deliveries) 15 5 Customer service (number of phone calls) 20 12 How much cost would be assigned from the Travel activity to Customer A?The following data relate to Department no. 3 of Tsing Corporation: Segment contribution margin 540,000 Profit margin controllable by segment manager 310000 Segment profit margin 150000 On the basis of this information, Department no. 3's variable operating expenses are: Select one: a. $80,000. b. $160,000. c. $230,000. d. $390,000. e. not determinable.
- Product Profitability Analysis Galaxy Sports Inc. manufactures and sells two styles of All Terrain Vehicles (ATVS), the Conquistador and Hurricane, from a single manufacturing facility. The manufacturing facility operates at 100% of capacity. The following per-unit information is available for the two products: Conquistador Hurricane Sales price $4,800 $3,200 Variable cost of goods sold (3,020) (2,140) Manufacturing margin $1,780 $1,060 Variable selling expenses (916) (516) Contribution margin $864 $544 Fixed expenses (410) (220) Operating income $454 $324 In addition, the following sales unit volume information for the period is as follows: Conquistador Hurricane Sales unit volume 2,800 2,000The managing director of a law firm has the monthly data (below) on total overhea labor hours to bill to clients. Develop a simple linear regression model between bi costs. \table [[\table[[Overhead], [Costs]], \table [[Billable], [Hours ]]], [375000, 3000], [425000, 4000], [445000, 5000], [496000, 6000], [580000, 7000], [605000, 8000]] Round the coefficient to two decimal places, do not include the $ symbol. For ea billable hours, the predicted overhead costs are estimated to increase by 109.12Customers as a Cost Object Morrisom National Bank has requested an analysis of checking account profitability by customer type. Customers are categorized according to the size of their account: low balances, medium balances, and high balances. The activities associated with the three different customer categories and their associated annual costs are as follows: Additional data concerning the usage of the activities by the various customers are also provided: Required: (Note: Round answers to two decimal places.) 1. Calculate a cost per account per year by dividing the total cost of processing and maintaining checking accounts by the total number of accounts. What is the average fee per month that the bank should charge to cover the costs incurred because of checking accounts? 2. Calculate a cost per account by customer category by using activity rates. 3. Currently, the bank offers free checking to all of its customers. The interest revenues average 90 per account; however, the interest revenues earned per account by category are 80, 100, and 165 for the low-, medium-, and high-balance accounts, respectively. Calculate the average profit per account (average revenue minus average cost from Requirement 1). Then calculate the profit per account by using the revenue per customer type and the unit cost per customer type calculated in Requirement 2. 4. CONCEPTUAL CONNECTION After the analysis in Requirement 3, a vice president recommended eliminating the free checking feature for low-balance customers. The bank president expressed reluctance to do so, arguing that the low-balance customers more than made up for the loss through cross-sales. He presented a survey that showed that 50% of the customers would switch banks if a checking fee were imposed. Explain how you could verify the presidents argument by using ABC.