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)#10741,000Total$5,160,000

Prepare customer profitability profile like the one in Exhibit 18.3.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

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

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

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

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