Mickey Forever is a toy producer and wholesaler in Australia and New Zealand. The company has...
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Mickey Forever is a toy producer and wholesaler in Australia and New Zealand. The company has classified its customers to three categories: small, medium and large according to their usual order size or sales volume. Mickey Forever's management has started a relatively simple customer profitability analysis project. The following table show the results of this analysis project: Sales revenue Direct costs of sales Use of product-related activities: Number of orders received Number of deliveries made Activity cost pool Orders filling costs Distribution-related costs Medium Large Total Small $1,400,900 $1,600,300 $2,500,000 $770,495 $880,165 $1,500,000 $3,150,660 $5,501,200 Indirect costs and their cost drivers are defined in the table below: 80 110 Click or tap here to enter text. 45 63 Cost driver Number of orders Number of deliveries Marketing/promotion/sales Sales dollars Administration-related costs Number of deliveries Click or tap here to enter text. 35 50 Required: a. Using the activity analysis results, assign the activity costs to each of the three customer categories. [8 marks] Estimated indirect costs $420,000 $835,000 $935,000 $460,600 b. Calculate the profitability of each of the customer categories and draw an appropriate conclusion from your analysis. [10 marks] Hints: conduct a customer profitability analysis based on the above customer related indirect costs. 160 223 c. The management of Mickey Forever is concerned about the increasing competition in the industry. They have acknowledged that customer relationship management is very important for the company's growth. Advise the management on what critical strategic factors should be monitored in addition to the financial profitability analysis. [6 marks] Mickey Forever is a toy producer and wholesaler in Australia and New Zealand. The company has classified its customers to three categories: small, medium and large according to their usual order size or sales volume. Mickey Forever's management has started a relatively simple customer profitability analysis project. The following table show the results of this analysis project: Sales revenue Direct costs of sales Use of product-related activities: Number of orders received Number of deliveries made Activity cost pool Orders filling costs Distribution-related costs Medium Large Total Small $1,400,900 $1,600,300 $2,500,000 $770,495 $880,165 $1,500,000 $3,150,660 $5,501,200 Indirect costs and their cost drivers are defined in the table below: 80 110 Click or tap here to enter text. 45 63 Cost driver Number of orders Number of deliveries Marketing/promotion/sales Sales dollars Administration-related costs Number of deliveries Click or tap here to enter text. 35 50 Required: a. Using the activity analysis results, assign the activity costs to each of the three customer categories. [8 marks] Estimated indirect costs $420,000 $835,000 $935,000 $460,600 b. Calculate the profitability of each of the customer categories and draw an appropriate conclusion from your analysis. [10 marks] Hints: conduct a customer profitability analysis based on the above customer related indirect costs. 160 223 c. The management of Mickey Forever is concerned about the increasing competition in the industry. They have acknowledged that customer relationship management is very important for the company's growth. Advise the management on what critical strategic factors should be monitored in addition to the financial profitability analysis. [6 marks]
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The image contains information about a company named Mickey Forever which is a toy producer and wholesaler in Australia and New Zealand The image shows a table with data needed to assign activity costs to customer categories and to calculate the profitability of each of the customer categories It also contains a requirement section with three parts a b and c asking for the analysis of the provided data To start with lets address part a a Using the activity analysis results assign the activity costs to each of the three customer categories The activity cost ... View the full answer
Related Book For
Management Accounting Information for Decision-Making and Strategy Execution
ISBN: 978-0137024971
6th Edition
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young
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