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Capital Doors Canberra (CDC) supplies parts for automatic garage doors in Canberra region. CDC'S direct costs consist of parts and equipment that are directly traceable to the customers and a pool of office overhead. Until recently, CDC estimated customer profitability by allocating the customer related office overhead to each customer based on share of revenues. For 2020, CDC reported the following results for four of its customers: Amy Opela George Total Revenues $260 000 $200 000 $122 000 $582 000 Less, parts and equipment costs $182 000 $175 000 $107 000 $464 000 Gross margin $78 000 $25 000 $15 000 $118 000 Less, total customer related office overhead $90 750 costs $27 250 Operating profit Mary Banks, CDC's new management accountant notes that office overhead is more than 10% of total parts and equipment costs. She spends a couple of weeks analysing the consumption of office overhead resources by these four customers. She collects the following information relating to the overhead costs activity areas and relevant cost-driver rate of the activity areas: Cost-driver rate $75 per service call Activity area Service call handling Parts ordering Billing and collection Customer database maintenance $80 per web-based parts order $50 per bill $10 per service call Mary Banks also collects the following information relating to the use of activities by the customers. Amy Opela George Mary Banks also collects the following information relating to the use of activities by the customers: Amy Opela George Number of service calls 150 240 120 Number of web-based parts orders 120 210 150 Number of bills 30 90 60 Required: (a) Calculate customer-level operating profit using the new information (activity-based costing that Mary Banks has gathered (There is no need to show a 'Total column in your calculation. Show other workings). (6 marks) (b) Briefly discuss what options should CDC consider regarding the improvements in individual customers' profitability considering the new ABC-based data and analysis of the office overhead? (6 marks)

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