SECTION B Question 2 Part A Kitty Nibbles Ltd is a cat food company that experienced significant growth in recent years, but the company is facing some difficulty with managing their customers recently. Its owner, Teela Monroe, is seeking ways to increase customer profitability. Teela asked her team to assess the relative profitability of Kitty Nibbles' two major customer groups Pet Shops and Pet Hotels. This requires Kitty Nibbles to identify the drivers of its selling, general and administrative (SG&A] expenses for the 2022 financial year of $85, 000. Additional data on the three main prod uct lines offered by Kitty Nibbles (Clucky Chicken, Baa hh Lamb and Fishy Fish) gathered for the 2022 financial year are as follows: Clucky chicken Baahh Lamb Fishy Fish Selling price per unit 10.00 19.00 26.00 Cost of goods sold per unit 8.00 12.35 11.70 Sales unit Pet Shops 16, 000 8, 000 22, 000 Pet Hotels 38, 000 12, 000 7, 000 Total sales units 54, 000 20, 000 29, 000 The resource driver, the number of full-time equivalent staff (FTE), and the activity drivers associated with these customer-driven activities are listed as follows: AC'tI ty FTE Activity Drivers Sales orders processing 4 Number of sales orders Delivery 6 Number of deliveries Total 10 Pet Shops Pet Hotels Total Number of sales orders 80 25 105 Number of deliveries 30 120 150 Required: Required: Conduct a customer profitability analysis for the 2022 financial year, showing the relative profitability of each customer group. Use activity-based costing to allocate the SG&A costs between the customer groups. You must enter your answer or a zero in each box below. Otherwise, you will lose marks. Please do NOT input any symbols (e.g.",", or $). i) Your first step is to calculate the total gross margin for each of the customer group. Key in your answers and in the boxes provided below. (2 marks) Total gross margin for Pet Shop customers. $ Total gross margin for Pet Hotel customers. $ i) Your second step is to calculate the total cost to serve for each of the customer group. Key in your answer in the boxes provided below: (4 marks) Total cost to serve for Pet Shop customers. $ Total cost to serve for Pet Hotel customers. $ ii) Your third step is to calculate the net profitability for each customer group. Key in your answer in the boxes provided below: (1 mark) Net profitability for Pet Shop customer. $ Net profitability for Pet Hotel customer