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 $ 486,000 260,000 92,000 162,000 $1,000,000 Customer Visit Days Modifications Revenue $ 400,000 500,000 600,000 1,000,000 1,500,000 $4,000,000 Gross Profit $ 150,000 200,000 230,000 420,000 590,000 $1,590,000 25 40 Phone Minutes 1,030 1,120 1,370 1,720 2,120 7,360 Electronic Communications 625 875 1,000 2,000 2,250 6,750 90 100 Totals 270 200 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 "Profit %" to 2 decimal places.) Customer Gross Profit Profit After Support Costs Profit % Share of Support Costs Based on Revenue $ 100,000 125,000 150,000 250,000 $ 375,000 $ 1,000,000 $ 150,000 200,000 230,000 420,000 $ 590,000 $ 1,590,000 C D Totals $ 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 "Net Profit %" to 2 decimal places.) Customer ABC Costs Net Profit After Support Costs Net Profit % Gross Profit $ 150,000 200,000 230,000 420,000 $ 590,000 $ 1,590,000 D Totals $ 0 $ 0