Johnson Beverage, Inc
Autor: Mikki • September 8, 2018 • 875 Words (4 Pages) • 567 Views
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Saver Superstore
Oscar's OddLots
Midwellen Supermarket
Downtown Retail
Product Handling
€ 67.200,00
€ 67.200,00
€ 6.720,00
€ 25.200,00
Taking orders from customers
€ 3.200,00
€ 8.000,00
€ 4.000,00
€ 6.000,00
Delivering the product
€ 1.718,75
€ 23.750,00
€ 6.875,00
€ 2.875,00
Expediting deliveries
€ 792,00
€ 19.800,00
€ 10.296,00
€ 7.128,00
Sales visits to customers
€ 3.000,00
€ 6.250,00
€ 4.500,00
€ 2.250,00
Total Allocation
€ 75.910,75
€ 125.000,00
€ 32.391,00
€ 43.453,00
ABC
Saver Superstore
Oscar's OddLots
Midwellen Supermarket
Downtown Retail
JBI
Net Revenues
€ 1.168.000,00
€ 1.192.000,00
€ 121.520,00
€ 454.500,00
€ 12.000.000,00
Cost of Goods
€ 1.048.000,00
€ 1.048.000,00
€ 104.800,00
€ 393.000,00
€ 10.480.000,00
Gross Margin
€ 120.000,00
€ 144.000,00
€ 16.720,00
€ 61.500,00
€ 1.520.000,00
Customer Service Cost
€ 75.910,75
€ 125.000,00
€ 32.391,00
€ 43.453,00
€ 1.200.000,00
Customer Profit
€ 44.089,25
€ 19.000,00
-€ 15.671,00
€ 18.047,00
€ 320.000,00
Customer Profit (% of net revenues)
3,77%
1,59%
-12,90%
3,97%
2,67%
Service Cost (% of Revenues
6,50%
10,49%
26,65%
9,56%
10,00%
Under the activity-based costing method Saver Superstore generates a profit of € 44.089,25 with a profitability of 3,77%, Oscar’s OddLots generates € 19.000 with a profitability of 1,59% and Downtown Retail generates € 18.047,00 with a profitability of 3.97%. On the contrary, Midwellen Supermarket fails to generate profit for the company, and brings a loss of € 15.671,00. Moreover, customer profitability for the whole company using the ABC method will remain unchanged due to the fact that we don't have a change in cost total value but we just rearrange the cost distribution.
- Compare it with the report prepared using traditional allocation method (exhibit 1) and draw your own conclusions about customer profitability for the four customers selected.
Traditional Method
Saver Superstore
Oscar's OddLots
Midwellen Supermarket
Downtown Retail
JBI
Net Revenues
€ 1.168.000,00
€ 1.192.000,00
€ 121.520,00
€ 454.500,00
€ 12.000.000,00
Cost of Goods
€ 1.048.000,00
€ 1.048.000,00
€ 104.800,00
€ 393.000,00
€ 10.480.000,00
Gross Margin
€ 120.000,00
€ 144.000,00
€ 16.720,00
€
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