US CMA Part 1 · Chapter 3 · Question 29 of 30
A distributor uses activity-based customer profitability analysis. For Customer K: revenue $180,000; cost of goods sold $108,000; 120 orders processed at $95 per order; 60 rush deliveries at $310 per delivery. What is the operating profit earned from Customer K?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) $42,000
Explanation
Gross margin = $180,000 - $108,000 = $72,000. Order processing = 120 x $95 = $11,400. Rush deliveries = 60 x $310 = $18,600. Customer operating profit = $72,000 - $11,400 - $18,600 = $42,000.
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