Gonalong, Inc. has 10 customers that account for all of its $4,520,000 of net income. Its activity-based
Question:
Gonalong, Inc. has 10 customers that account for all of its $4,520,000 of net income. Its activity-based costing system is able to assign all costs, except for $650,000 of general administrative costs, to key activities incurred in connection with serving its customers. A customer profitability analysis based on activity costing produced the following customer profits and losses:
Customer | #1 | $336,000 |
| #2 | 634,000 |
| #3 | (277,000) |
| #4 | 979,000 |
| #5 | 1,060,000 |
| #6 | 902,000 |
| #7 | 628,000 |
| #8 | 292,000 |
| #9 | (95,000) |
| #10 | 711,000 |
Total | | $5,170,000 |
(a) Using the customer profitability analysis provided in the exercise to calculate the following profits.
(i) Calculate the total profits from the 3 most profitable customers
(ii) Calculate the total profits for the 5 most profitable customers
(iii) Calculate the total profits for the 8 most profitable customers
(iv) Calculate the total profits for the 9 most profitable customers
Operations Management Creating Value Along the Supply Chain
ISBN: 978-0470525906
7th Edition
Authors: Roberta S. Russell, Bernard W. Taylor