Customer Profitability Analysis

Gonalong, Inc. has $10$ customers that account for all of its $$4,510,000$ of net income. Its activity$-$based costing system is able to assign all costs, except for $$650,000$ of general administrative costs, to key activities incurred in connection with serving its customers. A customer profitability analysis based on activity costing produced the following customer profits and losses:

Customer #$1$ $$326,000$ #$2594,000$ #$3(267,000)$ #$4999,000$ #$51,040,000$ #$6882,000$ #$7658,000$ #$8322,000$ #$9(135,000)$ #$10741,000$ Total $$5,160,000$

Prepare a customer profitability profile like the one in Exhibit $6\mathrm{.}3.$ The following link includes an Excel worksheet to create the profitability profile graph: profitability$\_$profile$\_$template.

Using the customer profitability analysis provided in the exercise to calculate the following profits.

$($i$)$ Calculate the total profits from the $3$ most profitable customers

$Answer

$($ii$)$ Calculate the total profits for the $5$ most profitable customers

$Answer

$($iii$)$ Calculate the total profits for the $8$ most profitable customers

$Answer

$($iv$)$ Calculate the total profits for the $9$ most profitable customers

$Answer