E14-19 (similar to) Question Help Burtman -Tech has only two retail and two wholesale customers. Information relating to each customer for 2017 follows (in thousands): B! (Click the icon to view the data.) Burtman - Tech's annual distribution-channel costs are $35 million for wholesale customers and 59 million for retail customers. The company's annual corporate-sustaining costs, such as salary for top management and general-administration costs, are $62 million. There is no cause-and-effect or benefits-received relationship between any cost-allocation base and corporate-sustaining costs. That is, Burtman - Tech could save corporate-sustaining costs only if the company completely shuts down. Read the requirements. Requirement 1. Calculate customer-level operating income. Begin by calculating each customer's gross margin. Then calculate the operating income for each customer. (Enter amounts in thousands.) All amounts in thousands of U.S. Dollars Wholesale Retail South America Green Global North America Wholesaler Wholesaler Energy Power Gross margin Data Table Wholesale Customers North America South America Wholesaler Wholesaler Retail Customers Green Global Energy Power Revenues at list prices 420,000 $ 590,000 $ 155,000 $ 110,000 Discounts from list prices 37,000 40,000 7,700 500 325,000 470,000 122,000 84,000 Cost of goods sold Delivery costs Order processing costs 420 650 210 125 700 1,030 185 125 Cost of sales visit 5,900 5,800 2,200 1,200 X Requirements 1. Calculate customer-level operating income. 2. Prepare a customer-cost hierarchy report. 3. Burtman - Tech's management decides to allocate all corporate-sustaining costs to distribution channels: $46 million to the wholesale channel and $16 million to the retail channel. As a result, distribution channel costs are now $81 million ($35 million + $46 million) for the wholesale channel and $25 million ($9 million + $16 million) for the retail channel. Calculate the distribution-channel-level operating income. On the basis of these calculations, what actions, if any, should Burtman - Tech's managers take? Explain. 4. How might Burtman - Tech use the new cost information from its activity-based costing system to better manage its business? E14-19 (similar to) Question Help Burtman -Tech has only two retail and two wholesale customers. Information relating to each customer for 2017 follows (in thousands): B! (Click the icon to view the data.) Burtman - Tech's annual distribution-channel costs are $35 million for wholesale customers and 59 million for retail customers. The company's annual corporate-sustaining costs, such as salary for top management and general-administration costs, are $62 million. There is no cause-and-effect or benefits-received relationship between any cost-allocation base and corporate-sustaining costs. That is, Burtman - Tech could save corporate-sustaining costs only if the company completely shuts down. Read the requirements. Requirement 1. Calculate customer-level operating income. Begin by calculating each customer's gross margin. Then calculate the operating income for each customer. (Enter amounts in thousands.) All amounts in thousands of U.S. Dollars Wholesale Retail South America Green Global North America Wholesaler Wholesaler Energy Power Gross margin Data Table Wholesale Customers North America South America Wholesaler Wholesaler Retail Customers Green Global Energy Power Revenues at list prices 420,000 $ 590,000 $ 155,000 $ 110,000 Discounts from list prices 37,000 40,000 7,700 500 325,000 470,000 122,000 84,000 Cost of goods sold Delivery costs Order processing costs 420 650 210 125 700 1,030 185 125 Cost of sales visit 5,900 5,800 2,200 1,200 X Requirements 1. Calculate customer-level operating income. 2. Prepare a customer-cost hierarchy report. 3. Burtman - Tech's management decides to allocate all corporate-sustaining costs to distribution channels: $46 million to the wholesale channel and $16 million to the retail channel. As a result, distribution channel costs are now $81 million ($35 million + $46 million) for the wholesale channel and $25 million ($9 million + $16 million) for the retail channel. Calculate the distribution-channel-level operating income. On the basis of these calculations, what actions, if any, should Burtman - Tech's managers take? Explain. 4. How might Burtman - Tech use the new cost information from its activity-based costing system to better manage its business