In addition, the company incurs selling and administrative expenses of $250,150. The company wishes to assign these costs to its three major retail customers, The Warehouse, Kosmo Co., and Supply Universe. These expenses are related to its three major nonmanufacturing activities: customer service, sales order processing, and advertising support. The advertising support is in the form of advertisements that are placed by Shrute Inc. to support the retailer's sale of Shrute copiers to consumers. The budgeted activity costs and activity bases associated with these activities are:

1. Determine the activity rates for each of the three nonmanufacturing activities. Round to the nearest whole dollar.

3. Construct customer profitability reports for the three customers, dated for the year ended December 31, 2016, using the activity costs in (2). The reports should disclose the gross profit and income from operations associated with each customer. Enter all amounts as positive numbers, except for a negative income from operations.

Allocating Selling and Administrative Expenses using Activity-Based Costing Shrute Inc. manufactures office copiers, which are sold to retailers. The price and cost of goods sold for each copier are as follows: $730 per unit Price Cost of goods sold 440 $290 per unit Gross profit Budgeted Activity Activity Activity Base Cost Number of service requests Customer service $35,190 Sales order processing Number of sales orders 22,560 Advertising support Number of ads placed 192,400 $250,150 Total activity cost Activity-base usage and unit volume information for the three customers is as follows: The Warehouse Supply Universe Total Kosmo Co. Number of service requests 50 10 170 230 Number of sales orders 260 110 570 940 Number of ads placed 20 10 100 130 Unit volume 570 570 570 1,710 Required: Activity Rate per serv. req Customer Service Sales Order Processing per bid Advertising Support per customer design change 2. Determine the activity costs allocated to the three customers, using the activity rates in (1) Activity Costs The Warehouse Kosmo Co. Supply Universe Shrute Inc. Customer Profitability Report For the Year Ended December 31 The Warehouse Supply Universe Kosmo Co. Revenues Cost of goods sold Gross profit Selling and administrative activities: Customer service Sales order processing Advertising support Total selling and administrative activities Income (loss) from operations