Question

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 that the activity- base usage quantities for each customer were as follows: Activity Base Number of bid requests Number of shipments Number of standard Items ordered Number of nonstandard items ordered Customer 1 Customer 2 Customer 15 60 25 55 50 20 35 52 65 85 a. Prepare a customer profitability report dated for the year ended December 31, 2018, showing (1) the operating income after customer service activities, (2) the gross profit as a percent of sales, and (3) the operating income after customer service activities as a percent of sales. Prepare the report with a column for each customer. Round percentages to the nearest whole percent. Metrold Electric Customer Profitability Report For the Year Ended December 31, 2018 Customer Customer Customer Cost of goods sold Grosso Customer service activities Shipment Support standard items Support montandard me Total customer service activities Operating income after customer service activities Gross profit as a percent of sales Operating income after customer service activities as a percent of

Answer 1

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Metroid
Workings for Answer a	D	E	F=D*E	G	H=D*G	I	J=D*I
Allocation of Overhead		Customer 1	Customer 2	Customer 3
Activity cost pool	Activity Rates	Activity used	Cost assigned	Activity used	Cost assigned	Activity used	Cost assigned
Bid preparation	420.00	15.00	6,300.00	40.00	16,800.00	60.00	25,200.00
Shipment	90.00	25.00	2,250.00	55.00	4,950.00	50.00	4,500.00
Support standard items	30.00	20.00	600.00	35.00	1,050.00	52.00	1,560.00
Support non standard items	180.00	6.00	1,080.00	65.00	11,700.00	85.00	15,300.00
Total cost assigned			10,230.00		34,500.00		46,560.00
Ans a- Customer profitability report	Customer 1	Customer 2	Customer 3
Revenue	130,000.00	210,000.00	180,000.00
Less: Cost of goods sold	(81,900.00)	(113,400.00)	(90,000.00)
Gross Profit	48,100.00	96,600.00	90,000.00
Customer service activities
Bid preparation	6,300.00	16,800.00	25,200.00
Shipment	2,250.00	4,950.00	4,500.00
Support standard items	600.00	1,050.00	1,560.00
Support non standard items	1,080.00	11,700.00	15,300.00
Total Customer service activities	(10,230.00)	(34,500.00)	(46,560.00)
Operating Income after Customer service activities	37,870.00	62,100.00	43,440.00
Gross Profit as a percent of sales	37%	46%	50%
Operating Income after Customer service activities as a percent of sales	29%	30%	24%