Question

Minnesota Manufacturing makes a component called Upper B2040. This component is manufactured only when ordered by a​ customer, so Mississippi keeps no inventory of Upper B2040. The list price is $114 per​ unit, but customers who place​ "large" orders receive a 14% discount on price. The customers are manufacturing firms.​ Currently, the salespeople decide whether an order is large enough to qualify for the discount. When the product is​ finished, it is packed in cases of 10. If the component needs to be exchanged or​ repaired, customers can come back within 14 days for free exchange or repair.

information about Minnesota​'s five biggest customers​ follows:

	Customer
	A	B	C	D	E
Number of units purchased	5,200	1,200	600	4,800	8,900
Discounts given	14%	14%	0%	14%	14% on half the units
Number of orders	6	18	54	30	24
Number of cases	580	150	110	450	830
Number of rush orders	5	5	2	0	11
Number of units exchanged/repaired	15	100	11	70	260

All customers except E ordered units in the same order size. Customer E​'s order quantity​ varied, so E got a discount part of the time but not all the time.

The full cost of manufacturing a unit of Upper B2040 is $ 88. In​ addition, Minnesota incurs​ customer-level costs.​ Customer-level cost-driver rates​ are:

Order taking	$300 per order
Product handling	$14 per case
Rush-order processing	$590 per rush order
Exchange and repair costs	$70 per unit

Requirement:

Rank the customers in order of most to least profitable and prepare a​ customer-profitability analysis in terms of operating income. ​(Use parentheses or a minus sign when entering negative numbers and losses. Enter percentages rounded to two decimal​ places, X.XX%)

Answer 1

Answer is given below