Compute the operating income for each customer in april

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Reference no: EM133053369

Question - Bigdog Company distributes pet products. Its ABC system has five activities:

Activity Area

Cost Driver Rate in 2020

1. Order processing

$50 per order

2. Line-item ordering

$5 per line item

3. Store deliveries

$40 per store delivery

4. Carton deliveries

$6 per carton

5. Shelf-stocking

$19 per stocking hour

Rufus McBrain, the controller of Bigdog Company, wants to use this ABC system to examine customer profitability. He focuses on two of his customers to find out the insights he can gain from using this system. Data for these two customers in April 2020 are as follows:

 

Pet Store Annerley

RSPCA store Springwood

Total orders

13

7

Average line items per order

11

19

Total store deliveries

5

7

Average cartons shipped per store delivery

21

18

Average hours of shelf stocking per store delivery

0.5

0.75

Average revenue per delivery

$2,600

$1,900

Average cost of goods sold per delivery

$2,100

$1,700

Required - Use the ABC information to compute the operating income for each customer in April 2020.

Reference no: EM133053369

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