Wingo Widgets makes and sells widgets to individual and corporate customers. Wid

Question

Wingo Widgets makes and sells widgets to individual and corporate customers. Widgets cost $1.73 to make and are sold for $3.08 each. Individual customers typically require little service beyond order processing. Because widgets don't differ much from one producer to the next, corporate customers demand additional services before they will commit to a purchase. Wingo's selling activities and cost pools are as follows: The following table compares the activity levels for the average individual customer and the average corporate customer: Calculate the activity rate for each cost pool. Calculate the customer net profit and customer profit margin for the average individual customer and the average corporate customer. (Round customer profit margin to 2 decimal places, e.g. 15.25%.) If Wingo wanted to drop one average corporate customer, how many average individual customers would need to be added to make up the lost net income? (Round answer to 2 decimal places, e.g. 15.25.) Average individual customers would need to make up the lost net income

Explanation / Answer

Statement showing computations Cost Pool Amount Annual Activity Cost per Activity= Cost/Activity Driver Order Processing                      201,600.00                2,520.00                           80.00 Orders Telephone Technical Support                         43,800.00                1,460.00                           30.00 Hours Product demonstrations                         65,760.00                   120.00                         548.00 Demonstrations Express Deliveries                         33,600.00                   350.00                           96.00 Deliveries                      344,760.00 Statement showing computations Particulars Individual Customer Corporate Widgets Purchase Cost                           1,730.00             17,300.00 Orders Individual = 12*80 Corporate = 50*80                               960.00                4,000.00 Technical Supprt Hours Individual = 2*30 Corporate = 70*30                                 60.00                2,100.00 Product demonstrations Individual = 0*548 Corporate = 7*548                3,836.00 Express Deliveries Individual = 1*96 Corporate = 15*96                                 96.00                1,440.00 Total Costs                           2,846.00             28,676.00 No of units                           1,000.00             10,000.00 Cost per unit                                   2.85                        2.87 Sales Value per unit                                   3.08                        3.08 Profit per unit                                   0.23                        0.21 Profit Margin =Profit/Sale Value 7.60% 6.90% Total Profit                               234.00                2,124.00

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.