Activity AreaCost Driver Rate in 20201.Order processing$39 per order2.Line-item ordering$4 per line item3.Store deliveries$46 per store delivery4.Carton deliveries$3 per carton5.Shelf-stocking$20 per stocking-hour

He focuses first on the Ma and Pa single-store distribution market. Using only two customers helps highlight the insights available with the ABC approach. Data pertaining to these two customers in August 2020 are as follows:

Albany PharmacyDallas PharmacyTotal orders167Average line items per order815Total store deliveries95Average cartons shipped per store delivery2419Average hours of shelf-stocking per store delivery0.500.25Average revenue per delivery$2,300$1,900Average cost of goods sold per delivery$2,150$1,4501.Use the ABC information to compute the operating income of each customer in August 2020. Comment on the results and what, if anything, Flair should do.2.Flair ranks the individual customers in the Ma and Pa single-store distribution market on the basis of monthly operating income. The cumulative operating income of the top 20% of customers is $63,290. Figure Four reports operating losses of $18,290 for the bottom 40% of its customers. Make four recommendations that you think Figure Four should consider in light of this new customer-profitability information.

Use the ABC information to compute the operating income of each customer in August

2020.

Comment on the results and what, if anything, Flair should do. (Round your answers to the nearest whole dollar. Use parentheses or a minus sign for operating losses.)

AlbanyDallas PharmacyPharmacyRevenues Cost of goods sold Gross margin Operating costs Operating income(loss)