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 $1,110 per unit (682) $428 per unit In addition, the company incurs selling and administrative expenses of $414,030. 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 Cost I Activity Activity Base Customer service $76,860 Number of service requests Sales order processing 25,920 Number of sales orders Advertising support 311,250 Number of ads placed $414,030 Total activity cost Activity-base usage and unit volume information for the three customers is as follows: eBook Show Me How 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 62 340 25 47 Number of sales orders 300 640 140 1,080 Number of ads placed 25 180. 44 249 Unit volume. 810 810 810 2,430 Required: 1. Determine the activity rates for each of the three nonmanufacturing activities. Round to the nearest whole dollar. Customer Service Sales Order Processing Activity Rate per serv. req. per sls, order per adi Advertising Support 2. Determine the activity costs allocated to the three customers, using the activity rates in (1). The Warehouse Kosmo Co. Supply Universe 3. Construct customer nenfitability rate Activity Costs 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 For the Year Ended December 31 Description 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 The Warehouse Kosmo Co. Supply Universe I DO 100000 10000