Bracelet Delights is a new company that manufactures custom jewelry. Bracelet
Delights currently has six customers referenced by customer number:
\(01,02,03,04,05,\) and 06 Besides the costs of making the jewelry, the company
has the following activities:1. Customer orders. The salespeople, designers,
and jewelry makers spend time with the customer. The cost-driver rate is
42dollars per hour spent with a customer.
2\. Customer fittings. Before the jewelry piece is completed, the customer may
come in to make sure it looks right and fits properly. Cost-driver rate is 30
dollars per hour.
3\. Rush orders. Some customers want their jewelry quickly. The cost-driver
rate is 90 dollars per rush order.
4\. Number of customer return visits. Customers may return jewelry up to 30
days after the pickup of the jewelry to have something refitted or repaired at
no charge. The cost-driver rate is 40 dollars per return visit.Information
about the six customers follows. Some customers purchased multiple items. The
cost of the jewelry is \(60 \%\) of the selling price.1. Calculate the customer-
level operating income for each customer. Rank the customers in order of most
to least profitable and prepare a customer-profitability analysis, as in
Exhibits \(14-3\) and \(14-4\)
2\. Are any customers unprofitable? What is causing this? What should Bracelet
Delights do about these customers?
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