RST Limited specialises in the distribution of pharmaceutical products. It buys from the pharmaceutical companies and resells to each of the three different markets:
(i) General supermarket chains
(ii) Drugstore chains
(iii) Chemist shops
The following data for the month of April current year in respect of RST Limited has been reported:
In the past, RST Limited has used gross margin percentage to evaluate the relative profitability of its distribution channel.
The company plans to use activity-based costing for analysing the profitability of its distribution channels. The activity analysis of RST Limited is as under:
The April, current year operating costs (other than cost of goods sold) of RST Limited are `8,27,970. These operating costs are assigned to five activity areas. The cost in each area and the quantity of the cost allocation basis used in that area for April, current year, are as follows:
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