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, and activity rate: Service Activity Activity Base Bid preparation Shipment Support standard items Support nonstandard items Number of bid requests Number of shipments Number of standard items ordered Number of nonstandard items ordered $16/shipment $20/std. itenm $75onstd.item Assume that the company had the following gross profit information for three representative customers: Customer1 $39,000 24,180 $14,820 38% Customer 2 Customer 3 Cost of goods sold Gross profit Gross profit as a percent of sales $26,000 13,520 $12,480 31.200 15,600 $15,600 514820 S12480$15.600 The administrative records indicated that the activity-base usage quantities for each customer were as follows: Customer 3 25 45 Customer 2 Customer 1 12 16 Activity Base Number of bid requests Number of shipments Number of standard items ordered Number of nonstandard items ordered18