Lucky Foods produces a variety of dog treats that it sells through three major wholesalers, BJ’s Pet Foods, Anderson Pet Products, and Nielsen, Inc. There has been some debate over the last few years about which customer is best for the firm. To answer this question, management has decided to do a customer profitability analysis for the prior year to see what it can find out. The information it gathers to do this analysis is in the following table.

REQUIRED:

a. Create a customer profitability variance report by line item for Lucky Foods’ three major customers.

b. Translate the results in the above table into percentage terms.

c. Create a customer profitability variance report by line item using the percentages derived in (b).

d. Which customer looks best? Why? Does your answer change any if you use percentages instead of absolute dollars?

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Lucky Foods BJ's Pet Foods Anderson Pet Products Nieksen, Inc. Line Item Budget Actual Budget Actual Budget Actual Revenue S18,000,000 $20,100,000 $15,000,000 $13,500,000 $20,000,000 S16,500,000 Less: Cost of goods sold $9,000,000 $9,748,500 $7,200,000 $6,210,000 $9,600,000 $7,590,000 Gross margin Order processing $9.000,000 $10,351,500 $7,800,000 $7,290,000 $10,400,000 $8,910,000 $2.000,000 $2,200,000 $1,500,000 $1,500,000 $2,500,000 $2,600,000