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 $760 per unit Cost of goods sold 460 Gross profit $300 per unit In addition, the company incurs selling and administrative expenses of $287,580. 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 Budgeted Activity Cost Activity Base $41,080 Customer service Sales order processing Advertising support Number of service requests Number of sales orders 22,500 224,000 Number of ads placed Total activity cost $287,580 Total 260 Activity-base usage and unit volume information for the three customers is as follows: The Warehouse Kosmo Co. Number of service requests Number of sales orders 250 Number of ads placed 20 Unit volume 660 Required: Supply Universe 200 540 120 660 900 160 1,980 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. Sales Order Processing Advertising Support $ $ per bid per customer design change 2. Determine the activity costs allocated to the three customers, using the activity rates in (1). 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 (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 Income (loss) from operations