Doreen Company has gathered the following data pertaining to activities it performed for two of its major customers Jerry Inc Donald Co Number of orders 5 30 Units per order 1,000 200 Sales returns Number of returns 2 5 Total units returned 40 175 Number of sales calls 12 4 Other Data Selling price...

Doreen Company has gathered the following data pertaining to activities it performed for two of its major

Question:

Doreen Company has gathered the following data pertaining to activities it performed for two of its major customers.

	Jerry Inc.	Donald Co.
Number of orders	5	30
Units per order	1,000	200
Sales returns:
Number of returns	2	5
Total units returned	40	175

Number of sales calls	12	4

Other Data:
Selling price per unit		$200.00
Gross Margin Ratio		25%

The firm sells its product, net 30. Both Jerry and Donald pay their accounts promptly and no accounts receivable is over 30 days. After a careful analysis using a business intelligence software on the operating data for the past 30 months, the firm has determined the following activity costs:

Activity	Cost Driver	Rate
Sales calls	per visit	$1,000
Order processing	per order	$300
Deliveries	per order	$500
Sales returns	per return	$100
	per unit	$5
Sales salary	per month	$100,000

Required

1. Classify activity costs into cost categories and compute the total cost for Doreen Company to service Jerry Inc. and Donald Co.

2. Compare the profitability of these twocustomers.

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...