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...

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 `1,000 and average cost per suit is `550. The CEO of MNP Suits wants to revaluate the profitability of each of the four customers in the current year to explore opportunities for increasing the profitability of his company in next year. The following data are available for the current year:

REQUIRED:

(i) Calculate the customer-level operating income, current year.

(ii) What do you recommend to the CEO of MNP Suits to do to increase the company’s operating income next year?

(iii) Assume MNP Suits’ distribution channel cost are `17,50,000 for its wholesale customers and `10,50,000 for the retail customers. Also, assume that its corporate sustaining costs are `12,50,000. Prepare the income statement of MNP Suits for the current year.