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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

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

Essentials of Business Analytics (MindTap Course List)
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...
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Use the ABC information to compute the operating income of each customer in August 2017. Comment on the results and what, if anything, Flair should do.

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
Transcribed Image Text: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
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