Fresno Fiber Optics, Inc. manufactures fiber optic cables for the computer and telecommunications industries. At the request of the company vice president of marketing, the cost management staff has recently completed a customer-profitability study. The following activity-based costing information was the basis for the analysis.

Customer-Related Activities Cost Driver Base Cost Driver Rate Sales activity ..................Sales visits ......................................$1,000 Order taking ....................Purchase orders ..............................200 Special handling ..............Units handled ..................................50 Special shipping ..............Shipments .......................................500

Cost-driver data for two of Fresnos customers for the most recent year are

Customer-Related Activities Trace Telecom Caltex Computer Sales activity ....................................8 visits..... 6 visits Order taking ....................................15 orders .................................20 orders Special handling ..............................800 units handled ...................600 units handled Special shipping .............................18 shipments ...........................20 shipments

The following additional information has been compiled for Fresno Fiber Optics for two of its cus-tomers, Trace Telecom and Caltex Computer, for the most recent year:

Trace Telecom Caltex Computer Sales revenue .....................$190,000 ......................$123,800 Cost of goods sold ...............80,000 ..........................62,000 General selling costs ...........24,000 ............................18,000 General administrative costs 19,000 ..........................16,000

Required: 1. Prepare a customer profitability analysis for Trace Telecom and Caltex Computer. (Hint: Refer to Exhibit 513 for guidance.) 2. Build a spreadsheet: Construct an Excel spreadsheet to solve requirement (1) above. Show how the solution will change if the following information changes: Trace Telecoms sales revenue was $185,000 and Caltex Computers cost of goods sold was $59,000.