Reference no: EM132776210

Ruiz Wholesalers operates at capacity and sells furniture items to four? department-store chains? (customers). Mr. Ruiz ?commented, "We apply ABC to determine? product-line profitability. The same ideas apply to customer? profitability, and we should find out our customer profitability as? well." Ruiz Wholesalers sends catalogs to corporate purchasing departments on a monthly basis. The customers are entitled to return unsold merchandise within a? six-month period from the purchase date and receive a full purchase price refund. The data that was collected from last? year's operations and the activity rates Ruiz has calculated? follow:
  
Customers pay the transportation costs. The cost of goods sold averages 70?% of net sales.

Requirement

Problem 1: Determine the contribution to profit from each chain last year. Comment on your solution.

Problem 2: Determine the contribution to profit from each chain last year.