Carmel Company has a frequent buyer program for its customers, where the customers can attain an "elite" level based on the number of orders and the total revenue of the orders. There are two
elite levels: Platinum and Titanium. The benefits of elite membership include discounts and access to special customer service representatives who can resolve problems. The company has one full time customer representative per 200 Titanium customers and one full-time customer representa tive per 2,000 Platinum customers. Customer representatives receive salaries plus bonuses of 2 percent of customer gross margin. Carmel spends 70 percent of its promotion costs on Titanium customers to encourage their loyalty
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- A television satellite operator launches a loyalty program by which points are granted for using satellite services. The points entitle the customer to a discount on the price to upgrade the satellite receiver or other equipment such as a digital box. Customers who accumulate 1,036 points will receive $259 off the purchase price of any equipment. (In other words, one point has a $0.25 value.) During the first year of the program, customers had accumulated 1,554,000 points on total revenue of $7,536,900. The operator expects that 60% of the points granted will be redeemed. Of the points granted in the first year, 518,000 were redeemed. How would the loyalty program be reflected in the first two years of launch? (Do not round other intermediate calculations. Round percentage of total selling price calculations to 1 decimal place, e.g. 15.2% and final answers to 0 decimal places, e.g. 125.) Revenue Liability related to loyalty points $ 7536900arrow_forwardASA Tours operates a network of offices around the globe specializing in local tours given by local residents and academics. Depending on the year, it operates at between 60 and 70 percent of capacity, which consists of locals who meet the criteria required by ASA. ASA operates three types of tours. Web-based tours consist of live-stream broadcasts with a limit of 15 participants. Group tours consist of small groups of no more than eight people. Finally. there are individual tours, which are personalized tours for no more than six people. Segmented income statements for a typical month appear as follows: Routes Web-Based Group Individual Sales $ 107,800 $ 275,600 $ 181,600 Variable costs 23,600 216,800 101,800 Fixed costs allocated to tours 35,396 89,092 59,012 Operating profit (loss) $ 48,804 $ (30,292) $ 20,788 ASA is considering dropping the group tours. If these tours are dropped, the revenue associated with the tours would be lost and the related variable costs…arrow_forwardDURAPLAST Company Ltd., opened its doors in 1979 as a wholesale supplier of plumbing equipment, tools, and parts to hardware stores, home-improvement centers, and professional plumbers in the Accra-Tema Metropolitan area. Over the years they have expanded their operations to serve customers across the nation and now employ over 200 people as technical representatives, buyers, warehouse workers, and sales and office staff. Most recently DURAPLAST has experienced fierce competition from the large online discount stores such as Qualiplast and Interplast. In addition, the company is suffering from operational inefficiencies related to its archaic information system. DURAPLAST’s revenue cycle procedures are described in the following paragraphs. Revenue Cycle DURAPLAST’s sales department consists of 17 full-time and part-time employees. They receive orders via traditional mail, e-mail, telephone, and the occasional walk-in. Because DURAPLAST is a wholesaler, the vast majority of its…arrow_forward
- Durham Parts (DP) makes a variety of products. It is organized in two divisions, Eastern and Western. The managers for each division are paid, in part, based on the financial performance of their divisions. The Western Division normally sells to outside customers but. on occasion, also sells to the Eastern Division. When it does, corporate policy states that the price must be cost plus 25 percent to ensure a "fair" return to the selling division. Western received an order from Eastern for 1,200 units. Western's planned output for the year had been 4,800 units before Eastern's order. Western's capacity is 6,000 units per year. The costs for producing those 4,800 units follow Materials Direct labor Other costs varying with output Fixed costs (do not vary with output) Totals Total $ 240,000 115,200 76,800 288,000 $ 720,000 Per Unit $ 50 24 16 60 $ 150 Required: a. If you are the manager of the Western Division, what unit cost would you ask the Eastern Division to pay? b. If you are the…arrow_forwardOriole Professionals, a management consulting firm, specializes in strategic planning for financial institutions. Mark Martin and George Garcia, partners in the firm, are assembling a new strategic planning model for clients to use. The model is designed to be used on most personal computers and replaces a rather lengthy manual model currently marketed by the firm. To market the new model, Mark and George will need to provide clients with an estimate of the number of labour hours and the computer time needed to operate the model. The model is currently being test-marketed at five small financial institutions. These financial institutions are listed below, along with the number of combined computer/labour hours used by each institution to run the model once: Financial Institutions Canadian National First Funds Financial Federal Pacific Coast Lakeview Savings Total Average Computer/Labour Hours Required 29.00 52.00 46.00 35.00 35.00 197.00 39.40 Any company that purchases the new model…arrow_forwardA medical supply company has customers in eight cities. It is trying to decide how many salespeople it needs to service these customers. Each salesperson needs to be located in one of the eight cities and needs to be assigned to a subset of the customers. For example, the company might base a salesperson in New York and have this person service customers in New York, Boston, and Philadelphia. Each salesperson receives an annual salary of $70,000 and can work as many as 230 days per year. This includes days working with customers and days traveling to and from customers. The file P06_90.xlsx contains data on the annual travel costs (for example, $15,900 for a salesperson based in New York traveling for customers in Orlando), the annual number of days of work required for the customers, and the annual number of days traveling to and from customers. Find an assignment that minimizes the total cost of salaries and traveling. The solution should indicatethe number of salespeople to employ,…arrow_forward
- Aulman Inc. has a number of divisions including a Furniture Division and a Motel Division. The Motel Division owns and operates a line of budget motels located along major highways. Each year, the Motel Division purchases furniture for the motel rooms. Currently, it purchases a basic dresser from an outside supplier for $60. The manager of the Furniture Division has approached the manager of the Motel Division about selling dressers to the Motel Division. The full product cost of a dresser is $29. While the Furniture Division has been operating at capacity (50,000 dressers per year) and selling them for $60 each, it expects to produce and sell only 40,000 dressers for $60 each next year. The Furniture Division incurs variable costs of $16 per dresser. The Motel Division needs 10,000 dressers per year; the Furniture Division can make up to 50,000 dressers per year. The company policy is that all transfer prices are negotiated by the divisions involved. Required: 1. What is the maximum…arrow_forwardMembers of the local Oriole club benefit from two key support services provided by Oriole's global headquarters: (1) social media assistance and (2) member services. The social media department provides 12% of its time to member services, 16% to North/South America groups, 29% to Asia groups, 21% to Africa/Australia groups, and 22% to European groups. The member services department provides 14% of its time to the social media department, 17% to North/South America groups, 17% to Asia, 13% to Africa/Australia, and 39% to Europe. If the step method is used to assign costs from the support departments to the operating units, and if social media is ranked first between the two support departments, what percentage of each support department's cost will be allocated to each operating/geographic group? (Round answers for member services to 2 decimal places, e.g. 15.25%.) Social Media Member Services Support Departments Social Media % % Member Services % % North/South America % %arrow_forwardParktown Medical Center, Inc.. is a small health care provider owned by a publicly heldcorporation. It employs 7 salaried physicians, I0 nurses, 3 support stafl, and 3 clericalworkers. The clerical workers perform such tasks as reception, correspondence, cashreceipIs,billing, and appointment scheduling. All are adequately bonded. Most patients pay for services rendered by cash or check on the day of their visit.Sometimes.however, the physician who is to performservices apprcredit based on an interview. When credit is approved, the physician files a memo vone of the clerks to set up the receivable using data the physician generates.The servicing physician prepares a charge sup that 1s given to one or the clerKs IorDicing and preparation of the patient S bill. At the end of the dav.one of the clerks usesthe bills to preparea revenue summarv and. in cases of credit sales. to update thecounts receivable subsidiary ledger.The frontoffice clerks receive cash and checksdirectly from patients…arrow_forward
- M4 Engineering has two divisions, the Fabrication Division and the Airplane Division. The Airplane Division may purchase engine mounting clamps from the Fabrication Division or from outside suppliers. The Fabrication Division sells engine mounting clamps both internally and externally. The market price for is $5,000 per 100 mounting clamps. The following conversation took place between the controllers of the Fabrication Division and Airplane Division: • Airplane Division: I hear you are having problems selling mounting clamps out of your division. Maybe I can help. • Fabrication Division: You've got that right. We're producing and selling at about 90% of our capacity to outsiders. Last year we were selling 100% of capacity. Would it be possible for your division to pick up some of our excess capacity? After all, we are part of the same company. • Airplane Division: What kind of price could you give me? • Fabrication Division: Well, you know as well as I that we are under strict profit…arrow_forwardFerntree Experiences has two operating divisions, Winery and Restaurant. The two divisions have a marketing agreement to provide incentives to customers. The Winery division offers coupons good for meals at the restaurants and the Restaurant division offers coupons good for wine tastings and purchases. Annual profits are $21 million. The two divisions meet the requirements for segment disclosures. Before the transactions are considered, revenues and costs (in thousands of dollars) for the two divisions are as follows. Revenue Costs Profit Winery $37,500 Revenues Costs Profit Restaurant $18,750 After adjusting appropriately for the effect of the marketing agreement, the revenues and costs are as follows. Winery Restaurant ? ? ? $13,100 $9,700 ? The value of the coupons issued by the Restaurant Division was double the value of the coupons Issued by the Winery Division. Required: What was the value of the coupons issued by the Winery Division? By the Restaurant Division? (Enter your…arrow_forwardThornton Health Care Center Incorporated has three clinics servicing the Seattle metropolitan area. The company's legal services department supports the clinics. Moreover, its computer services department supports all of the clinics and the legal services department. The annual cost of operating the legal services department is $331,000. The annual cost of operating the computer services department is $292,600. The company uses the number of patients served as the cost driver for allocating the cost of legal services and the number of computer workstations as the cost driver for allocating the cost of computer services. Other relevant information follows. Number of Patients:Number of Workstations Sewell clinic 6, 500 : 7 Alphretta clinic 5, 600: 11 Gwinnett clinic 6,300 : 14 Legal services 6 Computer services 18 Required Allocate the cost of computer services to all of the clinics and the legal services department. After allocating the cost of computer services, allocate the cost of…arrow_forward
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