MNP Suits is a ready-to-wear suit manufacturer. It has four customers: two wholesale-channel…

MNP Suits is a ready-to-wear suit manufacturer. It has four customers: two wholesale-channel customers and two retail-channel customers.
MNP Suits has developed the following activity-based costing system:

List selling price per suit is Rs. 1000 and average cost per suit is Rs. 550. The CEO of MNP Suits wants to evaluate the profitability of each of the four customers in 2003 to explore opportunities for increasing profitability of his company in 2004. The following data are available for 2003:

(a) Calculate the customer-level operating income in 2003.
(b) What do you recommend to CEO of MNP suits to do to increase the companys operating income in 2004?
(c) Assume MNP Suits’ distribution channel costs are Rs. 17,50,000 for its wholesale customers and Rs. 10,50,000 for the retail customers. Also, assume that its corporate sustaining costs are Rs. 12,50,000. Prepare Income statement of MNP Suits for 2003.

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