Please answer all three 10. (Customer Profitability) Alpha Limited has decided to analyse the profitability of its five newcustomers. It buys bottled water at 90 per case and sells to retail customers at a list price of108 per case. The data pertaining to five customers are :CustomersAC4,680* 108* 10819,688* 1087 106.201,36,800* 1087 9971,5507 1087 104.408,7757 1087 97.20Cases SoldList Selling PriceActual Selling PriceNumber of Purchase Orders1525302530Number of Customer Visits23Number of Deliveries1030604020Kilometres Travelled per DeliveryNumber of Expedited Deliveries2010301Its five activities and their cost drivers are :ActivityOrder takingCustomer visitsDeliveriesProduct handlingExpedited deliveriesCost Driver Rate* 750 per purchase order7 600 per customer visit7 5.75 per delivery Km travelled7 3.75 per case sold7 2,250 per expedited deliveryRequired:() Compute the customer-level operating income of each of five retail customers now beingexamined (A, B, C, D and E). Comment on the results.(i) What insights are gained by reporting both the list selling price and the actual selling pricefor each customer ?(ii) What factors Alpha Limited should consider in deciding whether to drop one or more of fivecustomers ?

When the resources are limited and the demand is higher than the supplies, customer profitability…

Answered: rofitability) Alpha buys bottled watem…

Business

Accounting

rofitability) Alpha buys bottled watem se. The data pertain

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter15: Managing Short-term Assets

Section: Chapter Questions

Problem 13PROB

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