Tennair Corporation manufactures cooling system components. The company has gathered the following information about two of its customers: Evans Equipment and Rogers Refrigeration. Evans Equipment Sales revenue Cost of goods sold i General selling costs $ 229,000 102,000 37,000 23,800 General administrative costs Cost-driver data used by the firm and traceable to Evans and Rogers are: Customer Activity Sales activity Order taking Special handling Special shipping Customer Activity Sales activity Order taking Special handling Special shipping Cost Driver Sales visits Sales orders Units handled Shipments Evans Equipment 12 visits 31 orders 460 units 35 shipments Rogers Refrigeration $160,000 61,000 28,500 17,850 Pool Rate $ 970 278 44 460 Rogers Refrigeration 9 visits 36 orders 410 units 44 shipments Required: A. Perform a customer profitability analysis for Tennair. Compute the gross margin and operating income on transactions related to Evans Equipment and Rogers Refrigeration

Tennair Corporation manufactures cooling system components. The company has gathered the following information about two of its customers: Evans Equipment and Rogers Refrigeration. Evans Equipment Sales revenue Cost of goods sold i General selling costs $ 229,000 102,000 37,000 23,800 General administrative costs Cost-driver data used by the firm and traceable to Evans and Rogers are: Customer Activity Sales activity Order taking Special handling Special shipping Customer Activity Sales activity Order taking Special handling Special shipping Cost Driver Sales visits Sales orders Units handled Shipments Evans Equipment 12 visits 31 orders 460 units 35 shipments Rogers Refrigeration $160,000 61,000 28,500 17,850 Pool Rate $ 970 278 44 460 Rogers Refrigeration 9 visits 36 orders 410 units 44 shipments Required: A. Perform a customer profitability analysis for Tennair. Compute the gross margin and operating income on transactions related to Evans Equipment and Rogers Refrigeration

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 18E

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