Shrute Inc. manufactures office copiers, which are sold to retailers. The price and cost of goods sold for each copier are as follows:

1	Price per unit	$1,110.00
2	Cost of goods sold per unit	682.00
3	Gross profit per unit	$428.00

In addition, the company incurs selling and administrative expenses of $414,030. 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 retailers sale of Shrute copiers to consumers. The budgeted activity costs and activity bases associated with these activities are:

1	Activity	Budgeted Activity Cost	Activity Base
2	Customer service	$76,860.00	Number of service requests
3	Sales order processing	25,920.00	Number of sales orders
4	Advertising support	311,250.00	Number of ads placed
5	Total activity cost	$414,030.00

Activity-base usage and unit volume information for the three customers is as follows:

	The Warehouse	Kosmo Co.	Supply Universe	Total
Number of service requests	62	340	25	427
Number of sales orders	300	640	140	1,080
Number of ads placed	25	180	44	249
Unit volume	810	810	810	2,430

	Required:
1.	Determine the activity rates for each of the three nonmanufacturing activity pools.
2.	Determine the activity costs allocated to the three customers, using the activity rates in (1).
3.	Construct customer profitability reports for the three customers, dated for the year ended December 31, using the activity costs in (2). The reports should disclose the gross profit and income from operations associated with each customer. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. Less, Plus or colons (:) will automatically appear if required. Enter all amounts as positive numbers, except for a negative income from operations.

Labels
December 31
For the Year Ended December 31
Selling and administrative activities
Amount Descriptions
Advertising support
Cost of goods sold
Customer service
Gross profit
Income from operations
Kosmo Co.
Other income (expense)
Plantwide factory overhead rate
Product cost distortion
Revenues
Sales order processing
Supply Universe
The Warehouse
Total selling and administrative activities