Solution
Metroid Electric
a. Customer profitability report showing
1. Operating income after customer service activities and
2. The gross profit as a percent of sales and
3. The operating income after customer service activities as a percent of sales.
Customer profitability Report
Computations –
Customer service activities costs are computed as follows,
a. Interpret report in part a.
The gross profit as a percent of sales indicated that Customer 1 was the least profitable, while Customer 3 was the most profitable. After deducting the activity costs associated with customer service activities, Customer 3 became the lease profitable, while Customer 1 became nearly as profitable as Customer 2. The reason is because Customer 3 consumed much more customer service activities than did the other customers. Apparently, Customer 3 ordered nonstandard products that required specialized bid requests. In addition, Customer 3 required more shipments, indicating smaller shipments to a customer’s location, rather than a few large shipments.
Activity-Based Costing and Customer Profitability Metroid Electric manufactures power distribution equipment for commercial customers, such as...
Activity-Based Costing and Customer Profitability Metroid Electric manufactures power distribution equipment for commercial customers, such as hospitals and manufacturers. Activity-based costing was used to determine customer profitability. Customer service activities were assigned to individual customers, using the following assumed customer service activities, activity base, and activity rate: Customer Service Activity Activity Base Activity Rate Bid preparation Number of bid requests $420 per request Shipment Number of shipments $90 per shipment Support standard items Number of standard items ordered $30 per...
Activity-Based Costing and Customer Profitability Metroid Electric manufactures power distribution equipment for commercial customers, such as hospitals and manufacturers. Activity-based costing was used to determine customer profitability. Customer service activities were assigned to individual customers, using the following assumed customer service activities, activity base, and activity rate: Customer Service Activity Activity Base Activity Rate Bid preparation Number of bid requests $420 per request Shipment Number of shipments $90 per shipment Support standard items Number of standard items ordered $30 per...
Activity-Based Costing and Customer Profitability Metroid Electric manufactures power distribution equipment for commercial customers, such as hospitals and manufacturers. Activity-based costing was used to determine customer profitability. Customer service activities were assigned to individual customers, using the following assumed customer service activities, activity base, and activity rate: Customer Service Activity Activity Base Activity Rate Bid preparation Number of bid requests $420 per request Shipment Number of shipments $90 per shipment Support standard items Number of standard items ordered $30 per...
Activity-Based Costing and Customer Profitability Metroid Electric manufactures power distribution equipment for commercial customers, such as hospitals and manufacturers. Activity-based costing was used to determine customer profitability. Customer service activities were assigned to individual customers, using the following assumed customer service activities, activity base, and activity rate: Customer Service Activity Activity Base Activity Rate Bid preparation Number of bid requests $420 per request Shipment Number of shipments $90 per shipment Support standard items Number of standard items ordered $30 per...
Activity-Based Costing and Customer Profitability Metroid Electric manufactures power distribution equipment for commercial customers, such as hospitals and manufacturers. Activity-based costing was used to determine customer profitability. Customer service activities were assigned to individual customers, using the following assumed customer service activities, activity base, and activity rate: Customer Service Activity Activity Base Activity Rate Bid preparation Number of bid requests $420 per request Shipment Number of shipments $90 per shipment Support standard items Number of standard items ordered $30 per...
Activity-Based Costing and Customer Profitability Schneider Electric manufactures power distribution equipment for commercial customers, such as hospitals and manufacturers. Activity-based costing was used to determine customer profitability. Customer service activities were assigned to individual customers, using the following assumed customer service activities, activity base, and activity rate: Customer Service Activity Activity Base Activity Rate Bid preparation Shipment Support standard items Support nonstandard items Number of bid requests $400 per request Number of shipments $ 80 per shipment Number of standard...
#9 Instructions Schneider Electric manufactures power distribution equipment for commercial customers, such as hospitals and manufacturers. Activity-based costing was used to determine customer profitability. Customer service activities were assigned to individual customers, using the following assumed customer service activities, activity base, and activity rate: Activity Rate Customer Service Activity Bid preparation Activity Base Number of bld requests $400 per request Shipment $80 per shipment Support standard items Support nonstandard Items Number of shipments Number of standard items ordered Number of...
C Customer Service Activity Activity Base Activity Rate Bid preparation Number of bid requests $420 perre Number of woments $90 per shipment Support standard Items Number of standard items ordered $30 pertem Support nostandard Items Number of constandard intens ordered $180 per nonstonem Assume that the company had the following gross profit information for three representative customers: Customer 1 Customer 2 Customer $130,000 $210,000 (81,9001 (113,400) 90,000 36,600 590,000 Gross profile as a percent of sales The administrative records indicated...
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