1. Schneider Electric manufactures power distribution equipment for commercial customers, such as hospitals and manufacturers. Activity-based costing was used to determine customer profitability. Customer service activities were assigned to individual customers, using the following assumed customer service activities, activity base, and activity rate:

Customer Service Activity	Activity Base	Activity Rate
Bid preparation	Number of bid requests	$400 per request
Shipment	Number of shipments	$80 per shipment
Support standard items	Number of standard items ordered	$25 per standard item
Support nonstandard items	Number of nonstandard items ordered	$150 per nonstandard item

Assume that the company had the following gross profit information for three representative customers:

Income Statement Item	Customer 1	Customer 2	Customer 3
Revenue	$120,000	$200,000	$160,000
Cost of goods sold	76,800	110,000	83,200
Gross profit	43,200	90,000	76,800
Gross profit as a % of sales	36%	45%	48%

The administrative records indicated that the activity-base usage quantities for each customer were as follows:

Activity Base	Customer 1	Customer 2	Customer 3
Number of bid requests	18	34	51
Number of shipments	30	60	48
Number of standard items ordered	15	30	50
Number of nonstandard items ordered	5	70	80

1. Prepare a customer profitability report dated for the year ended December 31, 2020, showing
   1. the income from operations after customer service activities.
   2. the gross profit as a percent of sales.
   3. the income from operations after customer service activities as a percent of sales. Prepare the report with a column for each customer. Round percentages to the nearest whole percent.
2. Interpret the report in part (a). How well or poorly is the company doing and why?