%) E14-19 (similar to) Question Help Hanson - Tech has only two retail and two wholesale customers. Information relating to each customer for 2017 follows (in thousands): BE: (Click the icon to view the data.) Hanson - Tech's annual distribution-channel costs are $40 million for wholesale customers and $10 million for retail customers. The company's annual corporate-sustaining costs, such as salary for top management and general-administration costs, are $61 million. There is no cause-and-effect or benefits-received relationship between any cost-allocation base and corporate-sustaining costs. That is, Hanson - Tech could save corporate-sustaining costs only if the company completely shuts down. Read the requirements. Customer Distribution Channels (all amounts in thousands of U.S. Dollars) Wholesale Customers Retail Customers Total N. America S. America Total Green Global Total Wholesale Wholesaler Wholesaler Retail Energy Power Operating income X i Data Table Wholesale Customers North America South America Wholesaler Wholesaler Retail Customers Green Global Energy Power $ 435,000 $ 610,000 $ 155,000 $ 95,000 40,000 7,900 520 Revenues at list prices Discounts from list prices Cost of goods sold Delivery costs Order processing costs 46,000 465,000 345,000 116,000 92,000 480 670 150 110 750 1,040 195 145 Cost of sales visit 5,500 5,200 2,500 1,300 2. Prepare a customer-cost hierarchy report. 3. Hanson - Tech's management decides to allocate all corporate-sustaining costs to distribution channels: $49 million to the wholesale channel and $12 million to the retail channel. As a result, distribution channel costs are now $89 million ($40 million + $49 million) for the wholesale channel and $22 million ($10 million + $12 million) for the retail channel. Calculate the distribution-channel-level operating income. On the basis of these calculations, what actions, if any, should Hanson - Tech's managers take? Explain. 4. How might Hanson - Tech use the new cost information from its activity-based costing system to better manage its business? %) E14-19 (similar to) Question Help Hanson - Tech has only two retail and two wholesale customers. Information relating to each customer for 2017 follows (in thousands): BE: (Click the icon to view the data.) Hanson - Tech's annual distribution-channel costs are $40 million for wholesale customers and $10 million for retail customers. The company's annual corporate-sustaining costs, such as salary for top management and general-administration costs, are $61 million. There is no cause-and-effect or benefits-received relationship between any cost-allocation base and corporate-sustaining costs. That is, Hanson - Tech could save corporate-sustaining costs only if the company completely shuts down. Read the requirements. Customer Distribution Channels (all amounts in thousands of U.S. Dollars) Wholesale Customers Retail Customers Total N. America S. America Total Green Global Total Wholesale Wholesaler Wholesaler Retail Energy Power Operating income X i Data Table Wholesale Customers North America South America Wholesaler Wholesaler Retail Customers Green Global Energy Power $ 435,000 $ 610,000 $ 155,000 $ 95,000 40,000 7,900 520 Revenues at list prices Discounts from list prices Cost of goods sold Delivery costs Order processing costs 46,000 465,000 345,000 116,000 92,000 480 670 150 110 750 1,040 195 145 Cost of sales visit 5,500 5,200 2,500 1,300 2. Prepare a customer-cost hierarchy report. 3. Hanson - Tech's management decides to allocate all corporate-sustaining costs to distribution channels: $49 million to the wholesale channel and $12 million to the retail channel. As a result, distribution channel costs are now $89 million ($40 million + $49 million) for the wholesale channel and $22 million ($10 million + $12 million) for the retail channel. Calculate the distribution-channel-level operating income. On the basis of these calculations, what actions, if any, should Hanson - Tech's managers take? Explain. 4. How might Hanson - Tech use the new cost information from its activity-based costing system to better manage its business