15-36 Cost-hierarchy income statement and allocation of corporate, division, and channel costs to customers. Rod Manufacturing Company produces metal rods for their customers. Its wholesale division is the focus of our analysis. Management of the company wishes to analyze the profitability of the three key customers in the division and has gathered the following information. Customer A B Customer Customer C Other Customers Division Revenue 1,054,826 1,544,680 2,210,162 480,332 5,290,000 Customer-level costs 675,378 951,669 1,517,895 266,058 3,411,000 Customer-level operating income 379,448 593,011 692,267 214,274 1,879,000 Customer-level operating income 35.973% 38.391% 31.322% 44.610% 35.5% percentage The company allocates wholesale channel costs to customers based on one cost pool and division costs based on two cost pools as follows. Customer actions do not influence these costs. Total Allocation Basis Wholesale-channel cost pool $740,000 Customer-level operating income Division costs Marketing costs Administration costs $560,000 $240,000 Customer revenue Customer-level costs 1. Calculate customer profitability as a percentage of revenue after assigning customer-level costs, dis- tribution-channel costs, and division costs. Comment on your results. 2. What are the advantages and disadvantages of Rod Manufacturing allocating wholesale-channel and division costs to customers