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, andactivity rate:

Assume that the company had the following gross profit information for three representative customers:

The administrative records indicated that the activity-base usage quantities for each customer were as follows:

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Prepare a customer profitability report dated for the year ended December 31, 2014, showing (1) the income from operations after customer service activities, (2) the gross profit as a percent of sales, and (3) the income from operations 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. Enter all amounts as positive numbers.

Schneider Electric
Customer Profitability Report
For the Year Ended December 31, 2014
Customer 1	Customer 2	Customer 3
Revenue	$	$	$
Cost of goods sold
Gross profit	$	$	$
Customer service activities:
Bid preparation	$	$	$
Shipment
Support standard items
Support nonstandard items
Total customer service activities	$	$	$
Income from operations after customer service activities	$	$	$
Gross profit as a percent of sales	%	%	%
Income from operations after customer service activities as a percent of sales	%	%	%