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Ellie Mosk, CEO of X - Space Industries, decided to expand the company's product offering beyond the core model rocket business. After investigation, she decided
Ellie Mosk, CEO of XSpace Industries, decided to expand the company's product offering beyond the core model
rocket business. After investigation, she decided to set up a separate division to design and manufacture products for
the drone market. Several companies were interested in having XSpace develop these drones, and financial results,
to date, have been encouraging. Revenue was $ million, gross margins have been running about and the
customer sales and support costs were $ million. However, there is a growing concern that some customers require
a disproportionate share of the sales and support resources, and the true profitability of the customers is unknown.
Data were collected to support an analysis of customer profitability:
Required:
Management felt the easiest way to allocate the sales and support costs was based on the total revenue. Using
total revenue as the allocation base, determine the profitability of each of the five customers.
Management felt that because the data revealed some customers require a disproportionate share of sales and
support resources, activitybased costing should be used to determine customer profitability. Use ABC to prepare a
customer profitability analysis.
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Management felt the easiest way to allocate the sales and support costs was based on the total revenue. Using total revenus
as the allocation base, determine the profitability of each of the five customers. Round your intermediate calculations and
final answers to decimal places. For percentages
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