$14-19$ Customer profitability, customer$-$cost hierarchy. Enviro$-$Tech has only two retail and two wholesale customers. Information relating to each customer for $2017$ follows $($in thousands$)$:

$\backslash$table$[[,$Wholesale Customers,Retail Customers$],[$North America Wholesaler,South America Wholesaler,Green Energy,Global Power$],[$Revenues at list prices,$$375,000,$$$590,000,$$$175,000,$$$130,000],[$Discounts from list prices,$25,800,47,200,8,400,590],[$Cost of goods sold,$285,000,510,000,144,000,95,000],[$Delivery costs,$4,550,6,710,2,230,2,145],[$Order processing costs,$3,820,5,980,2,180,1,130],[$Cost of sales visit,$6,300,2,620,2,620,1,575]]$

Enviro$-$Tech's annual distribution$-$channel costs are $$33$ million for wholesale customers and $$12$ million for retail customers. The company's annual corporate$-$sustaining costs, such as salary for top management and general$-$administration costs are $$48$ million. There is no cause$-$and$-$effect or benefits$-$received relationship between any cost$-$allocation base and corporate$-$sustaining costs. That is$,$ Enviro$-$Tech could save corporate$-$sustaining costs only if the company completely shuts down.

Calculate customer$-$level operating income using the format in Exhibit $14-3.$

Prepare a customer$-$cost hierarchy report, using the formatin Exhibit $14-6.$

Enviro$-$Tech's management decides to allocate all corporate$-$sustaining costs to distribution channels: $$38$ million to the wholesale channel and $$10$ million to the retail channel. As a result, distribution channel costs are now $$71$ million $($ $$33$ million $+$$$38$ million$)$ for the wholesale channel and $$22$ million $($ $$12$ million $+$$$10$ million$)$ for the retail channel. Calculate the distribution$-$channel$-$level operating income. On the basis of these calculations, what actions, if any, should Enviro$-$Tech's managers take? Explain.

How might Enviro$-$Tech use the new cost information from its activity$-$based costing system to better manage its business?