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 to set up a separate division to design and manufacture products for the drone market. Several companies were interested in having X-Space develop these drones, and financial results, to date, have been encouraging. Revenue was $4 million, gross margins have been running about 40%, and the customer sales and support costs were $1 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: Activity Sales visits Product modifications Phone calls E-mail/electronic communications Cost Driver Sales visit days Number of modifications Number of minutes Number of communications Total Cost $ 491,000 275,000 93,500 177,000 $ 1,036,500 Phone Customer Revenue Gross Profit Visit Days Modifications Minutes Electronic Communications A $ 405,000 $ 155,000 15 15 1,180 625 B 505,000 205,000 25 15 1,270 875 C 605,000 235,000 40 40 1,520 1,150 D 1,150,000 425,000 90 60 1,870 2,150 E 1,550,000 Totals $4,215,000 595,000 $1,615,000 100 270 70 2,270 2,400 200 8,110 7,200 Required: 1. 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. 2. Management felt that because the data revealed some customers require a disproportionate share of sales and support resources, activity-based costing should be used to determine customer profitability. Use ABC to prepare a customer profitability analysis. Complete this question by entering your answers in the tabs below. Required 1 Required 2 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. (Round your intermediate calculations and final answers to 2 decimal places. For percentages .1234 = 12.34%.) Customer Gross Profit Share of Support Costs Based on Profit After Support Costs Profit % Revenue A $ 155,000 % B 205,000 % C 235,000 % D 425,000 % E $ 595,000 % Totals $ 1,615,000 $ 0.00 $ 0.00 < Required 1 Required 2 > Required 1 Required 2 Management felt that because the data revealed some customers require a disproportionate share of sales and support resources, activity-based costing should be used to determine customer profitability. Use ABC to prepare a customer profitability analysis. (Round your intermediate calculations and final answers to 2 decimal places. For percentages .1234 = 12.34%.) Customer A $ Gross Profit 155,000 ABC Costs Net Profit After Support Costs Net Profit % % B 205,000 % C 235,000 % D 425,000 % E 595,000 % Totals $ 1,615,000 $ 0.00 $ 0.00 < Required 1 Required 2 > Show less