Customer profitability

1. Use the information in case Exhibits 1 and 2 and other necessary data in the case on activities and costs to develop an activity-based cost system for JBI to use to determine customer profitability. Use this system to estimate customer profitability for Saver Superstore, Oscar’s OddLots, Midwellen Supermarket, and Downtown Retail. 2. Compare the estimated costs you calculate using an activity-based cost system to the estimated costs using the current system of allocating customer service costs. What causes the different costing methods to produce different results? Which costing system provides management of JBI with better information? Why? 3. What are the strategic implications of your analysis? What recommendations do you have for the management of JBI?

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