Construct and Interpret a Product Profitability Report, Allocating Selling and Administrative Expenses Naper Inc. manufactures power equipment. Naper has two primary products-generators and air compressors. The following report was prepared by the controller for Naper's senior marketing management for the year ended December 31: Air Generators Compressors Total Revenue $1,810,300 $2,477,500 $4,287,800 Cost of goods sold 1,448,240 1,982,000 3,430,240 Gross profit $362,060 $495,500 $857,560 Selling and administrative expenses 182,260 Income from operations $675,300 The marketing management team was concerned that the selling and administrative expenses were not traced to the products. Marketing management believed that some products consumed larger amounts of selling and administrative expense than did other products. To verify this, the controller was asked to prepare a complete product profitability report, using activity-based costing. The controller determined that selling and administrative expenses consisted of two activities: sales order processing and post-sale customer service. The controller was able to determine the activity base and activity rate for each activity, as shown below. Activity Activity Base Activity Rate Sales order processing Sales orders $90 per sales order Post-sale customer service Service requests $220 per customer service request The controller determined the following activity-base usage information about each product: Generators Air Compressors Number of sales orders 302 738 Number of service requests 74 329 a. Determine the activity cost of each product for sales order processing and post-sale customer service activities. Sales Order Processing Post-sale Customer Service Activities Cost Activities Cost Generators Air Compressors Total b. Use the information in () to prepare a complete product profitability report dated for the year ended December 31. Calculate the gross profit to sales and the income from operations to sales percentages for each product. Round percentages to one decimal place. Enter all amounts as positive numbers. Naper Inc. Product Profitability Report For the Year Ended December 31 Generators Air Compressors Total Revenues Cost of goods sold Gross profit si S S Sales order processing Post-sale customer service Total selling and administrative expense si S Income from operations S S Gross profit as a percentage of sales % % 90 Income from operations as a percentage of sales % C. Interpret the product profitability report. user of Naper's sales and service activities. Many factors cause the air compressors The air compressors have the income from operations to sales percentage because the product is a to have income from operations as a percent of sales than generators. Contract and repa Product Profitability Report Allocating Selling and Administrative pers Ne ne more power superar hasta primary products-geron and compressors. The following powered by the controller for aper's senior marketing management for the year ended December 31 Generators Compressors Total 1.8.0.300 12.477.500 14.227.000 3.430340 $495.500 Carr of poadi | Income from operation 5675.300 The marketing management en concerned that the sing and diverses were noted to the product Marating management believed that some products and large amounts of selling and cabelo Activity Activity Rate Sale ordering Sale orders $90 per order Pentuale customer service Service requests $220 per customer service request Generators Air Compressor 302 Sales Order Processing Postale Customer Service Activities Cont Activities Cost Sales Order Processing Post-sale Customer Service Activities Cost Activities Cost Genero be the information in alta presarea complete prodat profiteren dered for the year ended December 3. Calculate the pre profesories and the income from person to sales percentages for each produs Nape Inc. Product Profitability Report For the Year Faded December 31 Cost of good old Gram profe there from on bili c. Interpret the product probity report The air compresorove the Income from the Construct and Interpret a Product Profitability Report, Allocating Selling and Administrative Expenses Naper Inc. manufactures power equipment. Naper has two primary products-generators and air compressors. The following report was prepared by the controller for Naper's senior marketing management for the year ended December 31: Air Generators Compressors Total Revenue $1,810,300 $2,477,500 $4,287,800 Cost of goods sold 1,448,240 1,982,000 3,430,240 Gross profit $362,060 $495,500 $857,560 Selling and administrative expenses 182,260 Income from operations $675,300 The marketing management team was concerned that the selling and administrative expenses were not traced to the products. Marketing management believed that some products consumed larger amounts of selling and administrative expense than did other products. To verify this, the controller was asked to prepare a complete product profitability report, using activity-based costing. The controller determined that selling and administrative expenses consisted of two activities: sales order processing and post-sale customer service. The controller was able to determine the activity base and activity rate for each activity, as shown below. Activity Activity Base Activity Rate Sales order processing Sales orders $90 per sales order Post-sale customer service Service requests $220 per customer service request The controller determined the following activity-base usage information about each product: Generators Air Compressors Number of sales orders 302 738 Number of service requests 74 329 a. Determine the activity cost of each product for sales order processing and post-sale customer service activities. Sales Order Processing Post-sale Customer Service Activities Cost Activities Cost Generators Air Compressors Total b. Use the information in () to prepare a complete product profitability report dated for the year ended December 31. Calculate the gross profit to sales and the income from operations to sales percentages for each product. Round percentages to one decimal place. Enter all amounts as positive numbers. Naper Inc. Product Profitability Report For the Year Ended December 31 Generators Air Compressors Total Revenues Cost of goods sold Gross profit si S S Sales order processing Post-sale customer service Total selling and administrative expense si S Income from operations S S Gross profit as a percentage of sales % % 90 Income from operations as a percentage of sales % C. Interpret the product profitability report. user of Naper's sales and service activities. Many factors cause the air compressors The air compressors have the income from operations to sales percentage because the product is a to have income from operations as a percent of sales than generators. Contract and repa Product Profitability Report Allocating Selling and Administrative pers Ne ne more power superar hasta primary products-geron and compressors. The following powered by the controller for aper's senior marketing management for the year ended December 31 Generators Compressors Total 1.8.0.300 12.477.500 14.227.000 3.430340 $495.500 Carr of poadi | Income from operation 5675.300 The marketing management en concerned that the sing and diverses were noted to the product Marating management believed that some products and large amounts of selling and cabelo Activity Activity Rate Sale ordering Sale orders $90 per order Pentuale customer service Service requests $220 per customer service request Generators Air Compressor 302 Sales Order Processing Postale Customer Service Activities Cont Activities Cost Sales Order Processing Post-sale Customer Service Activities Cost Activities Cost Genero be the information in alta presarea complete prodat profiteren dered for the year ended December 3. Calculate the pre profesories and the income from person to sales percentages for each produs Nape Inc. Product Profitability Report For the Year Faded December 31 Cost of good old Gram profe there from on bili c. Interpret the product probity report The air compresorove the Income from the