Alberto Company buys a product called Zoom at $15 each and sells it at $20 per unit. Company management has became interested in measuring the profitability of two of its customers for marking purposes. In response to management information needs, the accountant has prepared the following Customer Profitability Report in which operating expenses are allocated based upon sales revenues (4.5% of net sales revenues) Customer Profitability Report Selma Company 20,000 $20.00 Zillow Company 22,000 $20.00 Sales Units Selling Price Sales Cost of Goods Sold ($15 per unit) Gross Profit Operating expenses (4.5% of net sales) Operating profit $400,000.00 $440,000.00 $300,000.00 $330,000.00 $100,000.00 $110,000.00 $18.000.00 519,800.00 $82.000.00 $90,200.00 However, Lisa, the new accountant who is a graduate of has questioned the validity of the above customer profitability report Specifically, she has questioned the way the operating expense amount is allocated among the two customers. She believes that given conditions associated with each of the two customers, the amount of operating services utilized by the two customers are not the same, each requiring different levels of operating services. Accordingly, Lisa believes that company should use Activity Based Costing for the allocation of the operating costs among the customers for profitability analysis purpose Based upon examination of the records. Lisa was able to identify three main operating activities deriving the operating expenses as follows: Based upon examination of the records, Lisa was able to identify three main operating activities deriving the operating expenses as follows. Activity Sales calls cost (paid to salespeople) Order processing cost Delivery cost Cost Driver and Rate $800 per visit $300 per order plus $0,40 per unit in each order $250 per order plus $0.50 per mile Lisa has gathered the following data pertaining to operating activities performed for Selma and Zillow customers: Alpha Company Zillow Company Number of sales calls 4 11 Number of Orders 4 11 Number of units per order 5,000 2,000 Miles per delivery 100 miles 280 miles Using Activity Based Costing for the allocation of operating expenses of Alberto Company, compute operating profit or loss made from customer Zillow Company. Number of units per order 5,000 Miles per delivery 100 miles 11 2,000 280 miles Using Activity Based Costing for the allocation of operating expenses of Alberto Company, compute operating profit or loss made from customer Selma Company Example of Answer: 4000 or -4000 (No comma, space, decimal point, or $ sign. Show loss with - sign) Alberto Company buys a product called Zoom at $15 each and sells it at $20 per unit. Company management has became interested in measuring the profitability of two of its customers for marking purposes. In response to management information needs, the accountant has prepared the following Customer Profitability Report in which operating expenses are allocated based upon sales revenues (4.5% of net sales revenues) Customer Profitability Report Selma Company 20,000 $20.00 Zillow Company 22,000 $20.00 Sales Units Selling Price Sales Cost of Goods Sold ($15 per unit) Gross Profit Operating expenses (4.5% of net sales) Operating profit $400,000.00 $440,000.00 $300,000.00 $330,000.00 $100,000.00 $110,000.00 $18.000.00 519,800.00 $82.000.00 $90,200.00 However, Lisa, the new accountant who is a graduate of has questioned the validity of the above customer profitability report Specifically, she has questioned the way the operating expense amount is allocated among the two customers. She believes that given conditions associated with each of the two customers, the amount of operating services utilized by the two customers are not the same, each requiring different levels of operating services. Accordingly, Lisa believes that company should use Activity Based Costing for the allocation of the operating costs among the customers for profitability analysis purpose Based upon examination of the records. Lisa was able to identify three main operating activities deriving the operating expenses as follows: Based upon examination of the records, Lisa was able to identify three main operating activities deriving the operating expenses as follows. Activity Sales calls cost (paid to salespeople) Order processing cost Delivery cost Cost Driver and Rate $800 per visit $300 per order plus $0,40 per unit in each order $250 per order plus $0.50 per mile Lisa has gathered the following data pertaining to operating activities performed for Selma and Zillow customers: Alpha Company Zillow Company Number of sales calls 4 11 Number of Orders 4 11 Number of units per order 5,000 2,000 Miles per delivery 100 miles 280 miles Using Activity Based Costing for the allocation of operating expenses of Alberto Company, compute operating profit or loss made from customer Zillow Company. Number of units per order 5,000 Miles per delivery 100 miles 11 2,000 280 miles Using Activity Based Costing for the allocation of operating expenses of Alberto Company, compute operating profit or loss made from customer Selma Company Example of Answer: 4000 or -4000 (No comma, space, decimal point, or $ sign. Show loss with - sign)