The sales department of A Limited is analysing the customer profitability for its Product Z. It has decided to analyse the profitability of its five…

(a) 1. Computation of revenues (at listed price), discount, cost of goods sold and customer level operating activities costs: Customers A B C D E Units sold: (a) 4,500 6,000 9,500 7,500 12,750 Revenues (at listed price) (₹): (b) {(a) × ₹ 6,480)} 2,91,60,000 3,88,80,000 6,15,60,000 4,86,00,000 8,26,20,000 Revenues (at listed price) (₹): (c) {(a) x Actual selling price)} 2,91,60,000 3,82,32,000 (6,000 × 6,372) 5,64,30,000 (9,500 × 5,940) 4,69,80,000 (7,500 × 6,264) 7,43,58,000 (12,750 × 5,832) Discount (₹) (d) { (b) - (c)} 0 6,48,000 51,30,000 16,20,000 82,62,000 Cost of goods sold (₹): (e) {(a) x 5,400} 2,43,00,000 3,24,00,000 5,13,00,000 4,05,00,000 6,88,50,000 Customer level operating activities costs Order taking costs (₹): (No. of purchase orders × ₹ 4,500) 67,500 1,12,500 1,35,000 1,12,500 1,35,000 Customer visits costs (₹) (No. of customer visits x 3,600) 7,200 10,800 21,600 7,200 10,800 Delivery vehicles travel costs (₹) (Kms travelled by delivery vehicles X 7.50 per km.) 1,500 1,350 2,250 3,000 4,500 Product handling costs (₹) {(a) x 22.50} 1,01,250 1,35,000 2,13,750 1,68,750 2,86,875 Cost of expediting deliveries (₹) {No. of expedited deliveries x 13,500} - - - - 13,500 Total cost of customer level operating activities (₹) 1,77,450 2,59,650 3,72,600 2,91,450 4,50,675 Computation of Customer level operating income Customers A (₹) B (₹) C (₹) D (₹) E (₹) Revenues (At list price) (Refer to working note) 2,91,60,000 3,82,32,000 5,64,30,000 4,69,80,000 7,43,58,000 Less: Cost of goods sold (Refer to working note) (2,43,00,000) (3,24,00,000) (5,13,00,000) (4,05,00,000) (6,88,50,000) Gross margin 48,60,000 58,32,000 51,30,000 64,80,000 55,08,000 Less: Customer level operating activities costs (Refer to working note) (1,77,450) (2,59,650) (3,72,600) (2,91,450) (4,50,675) Customer level operating income 46,82,550 55,72,350 47,57,400 61,88,550 50,57,325