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 Number of shipments Shipment Support standard items $90 per shipment $30 per std. item Number of standard items ordered Support nonstandard items Number of nonstandard items ordered $180 per nonstd. item Assume that the company had the following gross profit information for three representative customers: Customer 1 Customer 2 Customer 3 Revenues $130,000 $180,000 $210,000 (113,400) Cost of goods sold (81,900) (90,000) Gross profit $48,100 $96,600 $90,000 Gross profit as a percent of sales 37% 46% 50% The administrative records indicated that the activity-base usage quantities for each customer were as follows: The administrative records indicated that the activity-base usage quantities for each customer were as follows: Activity Base Customer 1 Customer 2 Customer 3 Number of bid requests 15 40 60 Number of shipments 25 55 50 Number of standard items ordered 20 35 52 Number of nonstandard items ordered 6 65 85 a. Prepare a customer profitability report dated for the year ended December 31, 20Y8, 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. Metroid Electric Customer Profitability Report For the Year Ended December 31, 2048 Customer 1 Customer 2 Customer 3 Revenues Cost of goods sold $ $ Gross profit Customer service activities: Bid preparation Shipment Shipment Support standard items Support nonstandard items 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 sales % % %