Allocating selling and administrative expenses using activity-based costing Shrute Inc. manufactures office copiers, which are sold to retailers. The price and cost of goods sold for each copier are as follows: Price Cost of goods sold Gross profit $730 per unit (440) $290 per unit In addition, the company incurs selling and administiptive expenses of $207,400. 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: Activity Customer service Sales order processing Advertising support Total activity cost Budgeted Activity Cost Activity Base $36,720 Number of service requests 23,280 Number of sales orders 147,400 Number of ads placed $207,400 Activity-base usage and unit volume information for the three customers is as follows: The Supply Warehouse Kosmo Co. Universe Total Number of service requests Number of sales orders Number of ads placed && 50 10 180 240 270 120 580 970 20 10 80 110 Unit volume 690 690 690 2,070 The Supply Warehouse Kosmo Co. Universe Total Number of service requests 50 10 180 240 Number of sales orders: 270 120 580 970 Number of ads placed 20 10 80 110 Unit volume 690 690 690 2,070 Required: I 1. Determine the activity rates for each of the three nonmanufacturing activities. Round to the nearest whole dollar. Customer Service Activity Rate per serv, req. Sales Order Processing Advertising Support persis. order per ad 2. Determine the activity costs allocated to the three customers, using the activity rates in (1). The Warehouse Kosmo Co. Activity Costs Supply Universe 3. Construct customer profitability reports for the three customers, dated for the year ended December 31, using the activity costs in (2). The reports should disclose the gross profit and operating income associated with each customer. Shrute Inc. Customer Profitability Report Earth Vase Ended December 31 3. Construct customer profitability reports for the three customers, dated for the year ended December 31, using the activity costs in (2). The reports should disclose the gross profit and operating income associated with each customer. Description 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 Operating income 000 Previous