Question

Earng Delights is a new company that manufactures custom jewelry. Earing Delights currently has six customers referenced by customer number: 01, 02, 03, 04, 05, and 06. Besides the costs of making the jewelry, the company has the following activities: (Click to view the activities) (Click to view the customer data) Read the requirements Requirement 1. Calculate the customer-level operating income for each customer. (Complete all answer boxes. Enter a '0" for any zero balances. Use parentheses or a minus sign when entering operating losses.) Customer 01 02 03 04 06 i Data Table Revenue $ 600 $ 380 5,300 $ 3,180 260 S 156 2.500 5 1.500 05 4,900 $ 2,940 850 510 Cost of product Gross profit Customer-level costs Customer orders Customer fittings Rush order costs Information about the customers follows. Some customers purchased multiple items. The cost of the jewelry is 80% of the selling price Customer number 01 02 03 04 05 06 Sales revenue S 600 $ 5,300 $ 260 $ 2,500 $ 4,900 S $ 850 Cost of tem(s) S 360 $ 3,180 $ 156 1,500 $ 2,940 S 510 Hours saent on custamor arder 2 2 7 15 4 1 Hours an fittings 1 2 D 4 6 0 Number of rush orders 1 0 1 1 2 0 0 0 0 Number of return visits 1 0 D D D 2 5 1 Returns for repair Customer-level operating income (1088) 0 More Info Print Done 1. 1 Customer orders. The salespeople, designers, and jewelry makers spend time with the customer. The cost driver rate is $20 per hour spont with a customer. 2. Customer fittings. Before the jewelry piece is completed, the customer may come in to make sure it looks right and fits properly. Crest driver rale is $20 per hour 3. Rush orders. Some customers want their jawelry quickly. The cost driver rate is S120 per rush order. 4 Number of customer return visits. Customers may return jewelry up to 30 days after the pickup of the jewelry to have something refitted or repaired at no charge. The cost driver rate is $32 per return visit. Print Done

Answer 1

Particulars	Customer 01	Customer 02	Customer 03	Customer 04	Customer 05	Customer 06
Revenue	600	5,300	260	2,500	4,900	850
Cost of Products	360	3,180	156	1,500	2,940	510
Gross Profit	240	2,120	104	1,000	1,960	340
Customer Level Costs
Customer Orders	30	240	60	210	450	120
Customer Fittings	20	40	0	80	120	0
Rush Orders Costs	0	120	120	240	0	0
Repairs Costs	0	0	0	64	160	32
Customer Level Operating Income / (Loss)	190	1,720	(76)	406	1,230	188

Cost per Activity for Each Customer = Usage of Costs Driver of Certain Activity for Each Customer * Activity Allocation Rates

For Customer 01

Customer Order Costs = 30 * 1 = $ 30

Customer Fittings Costs = 20 * 1 = $ 20

For Customer 02

Customer Order Costs = 8 * 30 = $ 240

Customer Fittings Costs = 2 * 20 = $ 40

Rush Orders Costs = 1 * 120 = $ 129

For Customer 03

Customer Orders = 2 * 30 = $ 60

Rush Order Costs = 1* 120 = $ 120

Customer 04

Customer Order Costs = 7 * 30 = $ 210

Customer Fittings Costs = 4 * 20 = $ 80

Rush Orders Costs = 2 * 120 = $ 240

Repairs Costs = 2 * 32 = $ 64

Customer 05

Customer Order Costs = 15 * 30 = $ 450

Customer Fittings Costs = 6 * 20 = $ 120

Repairs Costs = 5 * 32 = $ 160

Customer 06

Customer Order Costs = 4 * 30 = $ 120

Repairs Costs = 1 * 32 = $ 32

Gross Profit = Sales Revenue - Variable Expenses

Customer Level Income / (Loss) = Gross Profit - Customer Order Costs - Customer Fittings Costs - Rush Order Costs - Repairs Costs

Note

Please For Customer no 2 Hours spent on Customer corder was not clearly visible so i have done it using taking the figure as 8 Hours. if there is any change in the figure please make that change or either feel free to ask me.