Flair ranks the individual customers in the Ma and Pa single-store distribution market on the basis of monthly operating income. The cumulative operating income of the top 20% of customers is $58,120. Best Drugs reports operating losses of $23,670 for the bottom 40% of its customers. Make four recommendations that you think Best Drugs should consider in light of this new customer-profitability information. Customer profitability, distribution. Best Drugs is a distributor of pharmaceutical products. ItsABC system has five activities:Activity Area1. Order processing2. Line-item orderingCost Driver Rate in 2017$42 per order$5 per line item$47 per store delivery$4 per carton$13 per stocking-hour3. Store deliveries4. Carton deliveries5. Shelf-stockingRick Flair, the controller of Best Drugs, wants to use this ABC system to examine individual customer profit-ability within each distribution market. He focuses first on the Ma and Pa single-store distribution market.Using only two customers helps highlight the insights available with the ABC approach. Data pertaining tothese two customers in August 2017 are as follows:Ann Arbor PharmacySan Diego PharmacyTotal orders13Average line items per order1119Total store deliveries5Average cartons shipped per store deliveryAverage hours of shelf-stocking per store deliveryAverage revenue per deliveryAverage cost of goods sold per delivery21180.50.75$2,600$2,100$1,900$1,700

Customer Profitability Analysis: Customer profitability analysis is the process of ascertaining the…

Answered: Customer profitability, distribution.…

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter2: Descriptive Statistics

Section: Chapter Questions

Problem 3P: Ohio Logistics manages the logistical activities for firms by matching companies that need products...

See similar textbooks

Related questions

Question

Flair ranks the individual customers in the Ma and Pa single-store distribution market on the basis of monthly operating income. The cumulative operating income of the top 20% of customers is $58,120. Best Drugs reports operating losses of $23,670 for the bottom 40% of its customers. Make four recommendations that you think Best Drugs should consider in light of this new customer-profitability information.

Customer profitability, distribution. Best Drugs is a distributor of pharmaceutical products. Its
ABC system has five activities:
Activity Area
1. Order processing
2. Line-item ordering
Cost Driver Rate in 2017
$42 per order
$5 per line item
$47 per store delivery
$4 per carton
$13 per stocking-hour
3. Store deliveries
4. Carton deliveries
5. Shelf-stocking
Rick Flair, the controller of Best Drugs, wants to use this ABC system to examine individual customer profit-
ability within each distribution market. He focuses first on the Ma and Pa single-store distribution market.
Using only two customers helps highlight the insights available with the ABC approach. Data pertaining to
these two customers in August 2017 are as follows:
Ann Arbor Pharmacy
San Diego Pharmacy
Total orders
13
Average line items per order
11
19
Total store deliveries
5
Average cartons shipped per store delivery
Average hours of shelf-stocking per store delivery
Average revenue per delivery
Average cost of goods sold per delivery
21
18
0.5
0.75
$2,600
$2,100
$1,900
$1,700

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions