Reference no: EM132757241
Problem - Star Pharma is a pharmaceutical firm operating in Singapore. It serves two channels: (a) small pharmacy stores and (b) large pharmacy stores. Star Pharma has four customers in total, two of which are small pharmacies (C1 and C2) and the other two are large pharmacies (C3 and C4). Star Pharma uses a discount pricing strategy and prices its products at variable cost plus 25%.
Relevant data for the year 2019 is as follows:
Particulars
|
C1
|
C2
|
C3
|
C4
|
Number of orders
|
4
|
9
|
6
|
3
|
Average order value before discount
|
$40,000
|
$20,000
|
$425,000
|
$400,000
|
Average discount
|
4.5%
|
9.5%
|
17.5%
|
11.5%
|
Regular deliveries
|
4
|
9
|
6
|
3
|
Expedited deliveries
|
2
|
0
|
2
|
0
|
Other important information:
Variable cost of goods sold amount to 80% of gross sales for each customer.
The general administration cost to small pharmacies for the year 2019 was $20,250 and the general administration cost to serve large pharmacies was $48,375.
The total order processing cost for the year 2019 was $16,500. The cost driver for order processing cost was number of orders.
The total cost for making regular deliveries in the year 2019 was $8,250. The cost driver for regular delivery cost was number of regular deliveries made.
The total cost for expedited deliveries in the year 2019 was $5,000. The cost driver for expedited delivery cost was number of expedited deliveries made.
Required -
(a) Calculate the activity cost driver rates for order processing, regular deliveries and expedited deliveries.
(b) Make a customer profitability statement that shows the contribution and operating profit from each customer and each customer channel.
What is the financial breakeven point for each plan
: What is the financial breakeven point for each plan? What is the degree of financial leverage for each plan at $7,000,000 of EBIT?
|
Compute break-even point under alternative courses of action
: The beverage is sold for 50 cents per 16-ounce bottle to retailers. Compute break-even point under alternative courses of action
|
Find and solve the copy department costs allocated to sales
: Copies were made during the year, 2,511,750 for sales and 2,534,250 for administration, calculate the copy department costs allocated to sales
|
How do calculate the new pe ratio of the company
: Solve the new PE ratio of the company. Pacific Energy Company has a new project that will generate additional earnings of $100,000 each year in perpetuity.
|
Make a customer profitability statement
: Make a customer profitability statement that shows the contribution and operating profit from each customer and each customer channel
|
What structural approaches ali and amira employ to resolve
: What structural approaches can Ali and Amira employ to resolve the conflict and minimize the resistance to the proposed change in organizational structure?
|
Find what the unadjusted balance of the home office account
: On December 30, 2020, the branch sent a check, Find what the unadjusted balance of the home office account in the books of the branch at December 31, 2020 is
|
What working capital at december was
: Accounting Policies, Changes in Estimates and Errors, Assume the same facts as above. Working capital at December 31, 20x0, was
|
Compute how much carrying amount of equipment on dec
: Entity A uses the straight line method of depreciation. How much is the carrying amount of the equipment on December 31, 20x3?
|