Oriole Solutions, Inc. is an employment services firm that places both temporary and permanent workers with a variety of clients. Temporary placements account for 70% of Oriole Solutions' revenue permanent placements provide the remaining 30%. President Gia Johnson recently read an article that discussed the need to consider selling and administrative costs in determining customer profitability-a practice that Oriole Solutions does not follow. Johnson is concerned that the company may be making poor choices in the selection of customers. In the temporary market. Oriole Solutions advertises and searches for workers, hires them, and pays them for the hours they work The company then bills customers for an amount that is higher than the workers' pay plus employment taxes. Because the temporary market is very competitive. Oriole Solutions has had to reduce the rates charged to customers to keep their business. After reviewing the year's operations, Johnson has determined that the company's customer service activities for the temporary business could be divided into three cost pools: Filling work orders, hiring temporary employees and processing payroll/billing customers. The following table shows the three cost pools and their annual capacity: Total Cost Annual Capacity $ 182,700 3,600 orders Cost Pool Filling work orders Hiring temporary employees Processing payroll/billing customers $ 72.900 2,700 applicants 185.000 hours worked $ 46,250 Oriole Solutions' largest four customers account for about 52% of total sales, so Johnson has decided to analyze those customers' accounts first to determine how much they are contributing to the bottom line. The gross margin the companies generate and the activities they use are as follows: Chemical Company $466,733 Trailer Manufacturer $145,764 Newspaper Publisher $122.604 Food Processor $167.327 Sales 341,620 110.473 92,205 120,451 65,366 24,350 18,621 23,411 Cost of sales Wages Taxes and fees Total cost of sales Gross margin Temps ordered Applicants 406,986 134,823 110.826 143.862 $59,747 $10.941 $11.778 $23,465 90 50 928 332 75 48 794 284 Hours worked 47,370 15.115 13,000 22.765 (a) Your answer is correct. Calculate the gross margin percentage for each customer. (Round answers to 1 decimal place, eg. 15.2%.) Gross Margin % Chemical Company 128 % Trailer Manufacturer 7.5 % Newspaper Publisher 9.6 96 Food Processor 14.0 % (b) Your Answer Correct Answer (Used) Your answer is correct Determine the activity rates for each of the three cost pools. (Round answers to 2 decimal places, eg. 15.25.) Cost Pool Activity Rate Filling work orders $ 50.75 per order Hiring temporary employees $ 27 per applicant Processing payroll/billing customers $ 0.25 per hour (c) Determine the customer net profit and customer profit margin for each customer. (Round customer net profit to decimal places, eg. 125 and customer profit margin to 1 decimal place, eg. 15.2%. Enter negative amounts using either a negative sign preceding the number, e.g. -45 or parentheses, eg. (45).) Customer net profit Customer profit margin Chemical Company $ % Trailer Manufacturer $ 96 Newspaper Publisher $ % Food Processor $ 6 %