Question 1: Customer Profitability Analysis (40 marks) Taylors Cheesecakes supplies cheesecakes to three large supermarket chains. Management has become concerned about the rising costs associated with the processing and dispatch of orders. An activiry analysis of the indirect costs identified the following customer-related costs: Sup. c sto Acvity Ord pi ng Reu, u rats cf of o 01 rub 01 Esti Customer 1 S200 ooo upted use of cost Customer 2 Sloo ooo so Customer 3 $133 333 as 100 Cost of goods sold are as follows: Cost of sales Req uired (a) Calculate the activity cost driver rate for each activity. (10 marks). (b) Assign the overhead costs to each of the three customers using the activity cost driver rates. (10 marks). (c) Calculate the net profit of each customer if the sales revenue pattern for each customer is as follows: Customer 1 S300 000; Customer 2 SISO 000; Customer 3 S200 000. (10 marks). (d) Advise the management of Taylors Cheesecakes as to whether any changes should be made in the management of its relationships with customers and suggestion possible strategies for how to best manage unprofitable customers. In your response, weigh up the pros and cons of divesting unprofitable customers (10 marks).