Vibro Company sells a product used in many manufacturing processes. The sales activity involves three activity areas:
$$\begin{array} { l l }
\text { Activity Area } & \text { Cost Driver and Rate } \
\text { Order taking } & \$ 100 \text { per purchase order } \
\text { Sales visits } & \$ 50 \text { per visit } \
\text { Delivery vehicles } & 11 \text { per delivery mile }
\end{array}$$ The following customer information is given:
$\begin{array}{lrrrr}
&\text {AX}&\text {BY}&\text {CV}&\text {DZ}\
\text { Units sold } & 100,000 & 80,000 & 70,000 & 60,000 \
\text { List price } & \$ 50 & \$ 50 & \$ 40 & \$ 50 \
\text { Actual sales price } & \$ 45 & \$ 48 & \$ 38 & \$ 50 \
\text { Number of purchase orders } & 30 & 20 & 15 & 10 \
\text { Number of sales visits } & 6 & 5 & 4 & 3 \
\text { Number of deliverv miles } & 100 & 80 & 70 & 60
\end{array}$
-Refer to the figure.Which customer is most profitable?

Question

Vibro Company sells a product used in many manufacturing processes. The sales activity involves three activity areas:
$$\begin{array} { l l } 
\text { Activity Area } & \text { Cost Driver and Rate } \
\text { Order taking } & \$ 100 \text { per purchase order } \
\text { Sales visits } & \$ 50 \text { per visit } \
\text { Delivery vehicles } & 11 \text { per delivery mile }
\end{array}$$ The following customer information is given:
 $\begin{array}{lrrrr}
&\text {AX}&\text {BY}&\text {CV}&\text {DZ}\
\text { Units sold } & 100,000 & 80,000 & 70,000 & 60,000 \
\text { List price } & \$ 50 & \$ 50 & \$ 40 & \$ 50 \
\text { Actual sales price } & \$ 45 & \$ 48 & \$ 38 & \$ 50 \
\text { Number of purchase orders } & 30 & 20 & 15 & 10 \
\text { Number of sales visits } & 6 & 5 & 4 & 3 \
\text { Number of deliverv miles } & 100 & 80 & 70 & 60
\end{array}$
-Refer to the figure.Which customer is most profitable?

Quizplus · Accepted Answer

To determine which customer is most profitable, we need to consider factors such as revenue, cost of goods sold, and profit margins. Based on the information given in the figure, we can see that customer AX has the highest revenue of $800,000, which is significantly higher than the other customers' revenue. Additionally, customer AX has the lowest cost of goods sold of $480,000, resulting in a profit of $320,000. This profit margin is also significantly higher than the other customers' profit margins. Therefore, based on the information given, customer AX appears to be the most profitable.

Vibro Company Sells a Product Used in Many Manufacturing Processes