MNP Suits is a ready-to-wear suit manufacturer. It has four customers: two wholesale-channel customers and two...

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MNP Suits is a ready-to-wear suit manufacturer. It has four customers: two wholesale-channel customers and two retail-channel customers. MNP Suits has developed the following activity-based cost- ing system: Activity Order processing Sales visits Delivery-regular Delivery-rushed Cost driver Number of purchase orders Number of customer visits Number of regular deliveries Number of rushed deliveries Total number of orders Total number of sales visits Regular deliveries Rush deliveries j10 List selling price per suit is 1,000 and average cost per suit is 550. The CEO of MNP Suits wants to revaluate the profitability of each of the four customers in the current year to explore opportunities for increasing the profitability of his company in next year. The following data are available for the current year: Item Average number of suits per order Average selling price per suit Wholesale customers W 44 8 41 3 400 2700 H Rate in next year 62 12 48 14 200 2800 1,225 per order 7,150 per visit 1,500 per delivery 4,250 per delivery Retail customers R 212 22 166 46 30 *850 T 250 20 190 60 25 1900 REQUIRED: (1) Calculate the customer-level operating income, current year. (ii) What do you recommend to the CEO of MNP Suits to do to increase the company's operating income next year? (iii) Assume MNP Suits distribution channel cost are 17,50,000 for its wholesale customers and 10,50,000 for the retail cus- tomers. Also, assume that its corporate sustaining costs are 12,50,000. Prepare the income statement of MNP Suits for the current year. MNP Suits is a ready-to-wear suit manufacturer. It has four customers: two wholesale-channel customers and two retail-channel customers. MNP Suits has developed the following activity-based cost- ing system: Activity Order processing Sales visits Delivery-regular Delivery-rushed Cost driver Number of purchase orders Number of customer visits Number of regular deliveries Number of rushed deliveries Total number of orders Total number of sales visits Regular deliveries Rush deliveries j10 List selling price per suit is 1,000 and average cost per suit is 550. The CEO of MNP Suits wants to revaluate the profitability of each of the four customers in the current year to explore opportunities for increasing the profitability of his company in next year. The following data are available for the current year: Item Average number of suits per order Average selling price per suit Wholesale customers W 44 8 41 3 400 2700 H Rate in next year 62 12 48 14 200 2800 1,225 per order 7,150 per visit 1,500 per delivery 4,250 per delivery Retail customers R 212 22 166 46 30 *850 T 250 20 190 60 25 1900 REQUIRED: (1) Calculate the customer-level operating income, current year. (ii) What do you recommend to the CEO of MNP Suits to do to increase the company's operating income next year? (iii) Assume MNP Suits distribution channel cost are 17,50,000 for its wholesale customers and 10,50,000 for the retail cus- tomers. Also, assume that its corporate sustaining costs are 12,50,000. Prepare the income statement of MNP Suits for the current year.

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