Veritek Wholesalers operates at capacity and sells furniture items to four department-store chains (customers). Mr. Veritek commented, "We apply ABC to determine product-line profitability. The same ideas apply to customer profitability, and we should find out our customer profitability as well." Veritek Wholesalers sends catalogs to corporate purchasing departments on a monthly basis. The customers are entitled to return unsold merchandise within a six-month period from the purchase date and receive a full purchase price refund. The following data were collected from last year's operations:

Veritek has calculated the following activity rates:
Activity ________________________________Cost-Driver Rate___
Regular order processing .............................$30 per regular order
Rush order processing .................................$150 per rush order
Returned items processing ............................$15 per item
Catalogs and customer support ......................$1,200 per customer
Customers pay the transportation costs. The cost of goods sold averages 75% of sales.
Required
Determine the contribution to profit from each customer last year. Comment on your solution.

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Customer Gross sales Sales returns: S40,000 $20,000 S110,000 $95,000 Number of items Amount 96 2H 64 32 8,000 3,000 7,700 9,000 Number of orders: 140 46 30 100 45 Rush 12