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 std. item
Support nonstandard items	Number of nonstandard items ordered	$150 per nonstd. item

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

	Customer 1		Customer 2		Customer 3
Revenues		$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 percent 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	14	38	55
Number of shipments	30	60	48
Number of standard items ordered	15	30	50
Number of nonstandard items ordered	5	70	80

Question Content Area

a. Prepare a customer profitability report dated for the year ended December 31, 20Y8, showing (1) the income from operations after customer service activities, (2) the gross profit as a percent of sales, and (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. Enter all amounts as positive numbers.

	Customer 1	Customer 2	Customer 3
Revenues
Cost of goods sold
Gross profit
Customer service activities:
Bid preparation
Shipment
Support standard items
Support nonstandard items
Total customer service activities
Income from operations after customer service activities
Gross profit as a percent of sales
Income from operations after customer service activities as a percent of sales