. Allocating Selling and Administrative Expenses using Activity-Based Costing Shrute Inc. manufactures office coplers, which are sold to retailers. The price and cost of goods sold for each copier are as follows: Price $740 per unit Cost of goods sold 440 Gross profit $300 per unit In addition, the company incurs selling and administrative expenses of $307,380. The company wishes to assign these costs to its three major retail customers, The Warehouse, Kosmo Co., and Supply Universe. These expenses are related to its three major nonmanufacturing activities: customer service, sales order processing, and advertising support. The advertising support is in the form of advertisements that are placed by Shrute Inc. to support the retailer's sale of Shrute copiers to consumers. The budgeted activity costs and activity bases associated with these activities are: Budgeted Activity Activity Activity Base Cost Customer service $33,880 Number of service requests Sales order processing 28,700 Number of sales orders Advertising support 244,800 Number of ads placed Total activity cost $307,380 Activity-base usage and unit volume information for the three customers is as follows: The Warehouse Kosmo Co. Number of service requests 50 10 Number of sales orders 230 100 Supply Universe Total 160 220 490 820 eBook Show Me How Print Item Activity-base usage and unit volume information for the three customers is as follows: The Warehouse Kosmo Co. Supply Universe Total 50 10 160 220 Number of service requests Number of sales orders Number of ads placed Unit volume 230 100 490 820 20 20 130 170 640 640 640 1,920 Required: 1. Determine the activity rates for each of the three nonmanufacturing activities. Round to the nearest whole dollar. Activity Rate Customer Service per serv. reg. per bid Sales Order Processing Advertising Support per customer design change 2. Determine the activity costs allocated to the three customers, using the activity rates in (1). Activity Costs The Warehouse Kosmo Co. Supply Universe 3. Construct customer profitability reports for the three customers, dated for the year ended December 31, 2016, using the activity costs in disclose the gross profit and income from operations associated with each customer Enter all amounts as positive numbers, except for a nes Check My Work 3. Construct customer profitability reports for the three customers, dated for the year ended December 31, 2016, using the activity costs in (2). The reports should disclose the gross profit and income from operations associated with each customer. Enter all amounts as positive numbers, except for a negative income from operations, Shrute Inc. Customer Profitability Report For the Year Ended December 31 The Warehouse Kosmo Co. Supply Universe Revenues Cost of goods sold Gross profit Selling and administrative activities: Customer service Sales order processing Advertising support Total selling and administrative activities Check My Work Previous Next) 3. Construct customer profitability reports for the three customers, dated for the year ended December 31, 2016, using the activity costs in (2). The reports should disclose the gross profit and income from operations associated with each customer. Enter all amounts as positive numbers, except for a negative income from operations Shrute Inc. Customer Profitability Report For the Year Ended December 31 The Warehouse Kosmo Co. Supply Universe Revenues Cost of goods sold Gross profit Selling and administrative activities Customer service Sales order processing Advertising support polo Q000 Total Selling and administrative activities Income (loss) from operations Previous Next) Check My Work
