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 i $420 per request Shipment Support standard items Number of shipments $90 per shipment Number of standard items ordered $30 per std. item 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 $210,000 $180,000 Cost of goods sold (81,900) (113,400) (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: