Leroux - Tech has only two retail and two wholesale customers. Information relating to each customer for 2020 follows (in thousands): (Click the icon to view the data.) Leroux - Tech's annual distribution-channel costs are $40 million for wholesale customers and $6 million for retail customers. The company's annual corporate-sustaining costs, such as salary for top management and general-administration costs, are $69 million. There is no cause-and-effect or benefits-received relationship between any cost-allocation base and corporate-sustaining costs. That is, Leroux - 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.) Gross margin All amounts in thousands of U.S. Dollars Wholesale Retail South America Green Global Wholesaler Energy Power North America Wholesaler Data Table - Wholesale Customers Retail Customers North America South America Green Global Wholesaler Wholesaler Energy Power Revenues at list prices $ 465,000 $ 570,000 $ 165,000 $ 125,000 Discounts from list prices 20,000 44,000 7,200 540 Cost of goods sold 345,000 470,000 122,000 94,000 Delivery costs 400 680 230 115 Order processing costs 725 1,040 205 120 Cost of sales visit 5,900 5,800 2,100 1,300 Print Done Requirements 1. Calculate customer-level operating income. 2. Prepare a customer-cost hierarchy report. 3. Leroux - Tech's management decides to allocate all corporate-sustaining costs to distribution channels: $45 million to the wholesale channel and $24 million to the retail channel. As a result, distribution channel costs are now $85 million ($40 million + $45 million) for the wholesale channel and $30 million ($6 million + $24 million) for the retail channel. Calculate the distribution-channel-level operating income. On the basis of these calculations, what actions, if any, should Leroux - Tech's managers take? Explain. 4. How might Leroux - Tech use the new cost information from its activity-based costing system to better manage its business? Print Done -