Question

ABC Manufacturing Ltd. manufacture electrical parts. Data for two of the company's customers is as follows:

	Customer A	Customer B
Revenue at list price	$592,500	$102,000
Units Sold	75,000	10,000
Unit list price	$7.90	$10.20
Cost of goods per unit	$5.10	$6.25
Sales discounts	$11,850	$1,020
Customer - specific costs
Order-taking	$13,600	$1,500
Product-handling	$14,100	$1,350
Delivery	$9,400	$1,290

Require

a) Prepare a comparative income statement in gross margin format with one column for each customer; present customer-specific costs as period expenses.

Answer 1

		Customer A	Customer B
Units Sold	A	75,000	10,000
Unit Selling Price	B	7.90	10.20
Sales Revenue	C = A*B	5,92,500	1,02,000
Cost of Goods Sold (per unit)	D	5.1	6.25
Total Cost of Goods Sold	E = A * D	3,82,500	62,500
Gross Margin	F = C - E	2,10,000	39,500
Order Cost	G	13,600	1,500
Product handling	H	14,100	1,350
Delivery	I	9,400	1,290
Net Income	J = F - G - H - I	1,72,900	35,360
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