Figure 11-2 Blue Vibrance Company sells a product used in many manufacturing processes. The sales activity involves three activity areas:
The following customer information is given:
Refer to Figure 11-2. What is the profitability of customer BY?

Question

Figure 11-2 Blue Vibrance Company sells a product used in many manufacturing processes. The sales activity involves three activity areas:
 The following customer information is given:
 Refer to Figure 11-2. What is the profitability of customer BY?

Quizplus · Accepted Answer

To calculate the profitability of customer BY, we need to subtract the cost of goods sold and the activity costs from the revenue.

Revenue: 
600 units x $50,000 per unit = $30,000,000

Cost of Goods Sold: 
600 units x ($37,000 per unit + $4,500 per unit) = $25,500,000

Activity Costs: 
Activity 1: 
5 hours x $2,500 per hour = $12,500 
Activity 2: 
350 x $100 per unit = $35,000 
Activity 3: 
250 x $150 per unit = $37,500

Total Activity Costs = $85,000

Profitability: 
$30,000,000 - $25,500,000 - $85,000 = $3,837,670

Therefore, the answer is C.

Figure 11-2 Blue Vibrance Company Sells a Product Used in Many