Customer Profitability Analysis Spring Company collected the following data pertaining to its activities with selected customers.
Spring Company mails monthly statements on or before the first day of each month.HS pays all of its account payables within the payment discount periods.Adventix does not take the early payment discounts.In fact, the company pays half of its accounts on the date that these accounts are due and pays the remainder at the end of the following month.Baldwin also does not take advantage of discounts for early payments.However, it pays its accounts on the specified due date.Cost of goods sold is sixty percent of gross sales price.Joan Lieberman, the controller of Spring Company, has estimated that the cost of working capital is approximately 2 percent per month.
Lieberman also gathered the following cost data: $\begin{array}{ll}
\hline \text { Activity } & \text { Cost Driver and Rate } \
\text { Order taking } & \$ 50 \text { per order } \
\text { Order processing } & \$ 75 \text { per order } \
\text { Delivery } & \$ 300 \text { per delivery } \
\text { Expedited orders } & \$ 500 \text { per order } \
\text { Restocking } & \$ 10 \text { per unit plus } \$ 200 \text { per return } \
\text { Sales visits } & \$ 800 \text { per visit } \
\hline
\end{array}$ Required:
Prepare and interpret a customer profitability analysis for Spring Company.How does it help Spring Company become more competitive and profitable?

Question

Customer Profitability Analysis Spring Company collected the following data pertaining to its activities with selected customers.
  Spring Company mails monthly statements on or before the first day of each month.HS pays all of its account payables within the payment discount periods.Adventix does not take the early payment discounts.In fact, the company pays half of its accounts on the date that these accounts are due and pays the remainder at the end of the following month.Baldwin also does not take advantage of discounts for early payments.However, it pays its accounts on the specified due date.Cost of goods sold is sixty percent of gross sales price.Joan Lieberman, the controller of Spring Company, has estimated that the cost of working capital is approximately 2 percent per month.
Lieberman also gathered the following cost data: $\begin{array}{ll}
\hline \text { Activity } & \text { Cost Driver and Rate } \
\text { Order taking } & \$ 50 \text { per order } \
\text { Order processing } & \$ 75 \text { per order } \
\text { Delivery } & \$ 300 \text { per delivery } \
\text { Expedited orders } & \$ 500 \text { per order } \
\text { Restocking } & \$ 10 \text { per unit plus } \$ 200 \text { per return } \
\text { Sales visits } & \$ 800 \text { per visit } \
\hline
\end{array}$ Required:
Prepare and interpret a customer profitability analysis for Spring Company.How does it help Spring Company become more competitive and profitable?

Quizplus · Accepted Answer

The Answer of Customer Profitability Analysis Spring Company collected the following data pertaining to its activities with selected customers.
  Spring Company mails monthly statements on or before the first day of each month.HS pays all of its account payables within the payment discount periods.Adventix does not take the early payment discounts.In fact, the company pays half of its accounts on the date that these accounts are due and pays the remainder at the end of the following month.Baldwin also does not take advantage of discounts for early payments.However, it pays its accounts on the specified due date.Cost of goods sold is sixty percent of gross sales price.Joan Lieberman, the controller of Spring Company, has estimated that the cost of working capital is approximately 2 percent per month.
Lieberman also gathered the following cost data: $\begin{array}{ll}
\hline \text { Activity } & \text { Cost Driver and Rate } \
\text { Order taking } & \$ 50 \text { per order } \
\text { Order processing } & \$ 75 \text { per order } \
\text { Delivery } & \$ 300 \text { per delivery } \
\text { Expedited orders } & \$ 500 \text { per order } \
\text { Restocking } & \$ 10 \text { per unit plus } \$ 200 \text { per return } \
\text { Sales visits } & \$ 800 \text { per visit } \
\hline
\end{array}$ Required:
Prepare and interpret a customer profitability analysis for Spring Company.How does it help Spring Company become more competitive and profitable?

Customer Profitability Analysis Spring Company Collected the Following Data Pertaining