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.What is the profitability of customer BY?

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.What is the profitability of customer BY?

Quizplus · Accepted Answer

To calculate the profitability of customer BY, we need to subtract the total cost of sales and the total operating expenses from the total revenue. The total revenue for customer BY is $11,500,000. The total cost of sales is $4,962,330, and the total operating expenses are $2,700,000. Therefore, the profitability of customer BY is:

$11,500,000 - $4,962,330 - $2,700,000 = $3,837,670.

Therefore, the correct answer is B.

Vibro Company Sells a Product Used in Many Manufacturing Processes