Tech Company manufactures one product, Product A. The price and cost of goods sold per unit are as follows: Price per unit $1,500 Cost of goods sold per unit 970 Gross profit per unit $ 530 In addition, the company incurs sales and administrative expenses of $960,000. The company wishes to assign these overhead costs to their three major customers, Customers 1, 2 and 3. These expenses are related to three major non-manufacturing activities: call centre support, invoicing and engineering support (cost pools). The engineering support is in the form of engineering changes that are placed by the customer to change the design of a product. The full-time equivalent (FTE) staff and activity cost drivers associated with these activities are:

	FTE	Activity Cost Driver
Call centre support	40	Number of calls
Invoicing	160	Number of invoices
Engineering support	130	Number of customer design changes
Total	330

Customer 1 requires extensive support in the form of sales order processing, service and engineering support, as can be seen from the following activity information:

	Customer 1	Customer 2	Customer 3	Total
Number of calls	320	100	180	600
Number of invoices	560	160	280	1000
Number of customer design changes	160	80	60	300
Unit volume	3,600	4,000	4,400	12,000

Required: (a) Determine the activity costs for each of the three major non-manufacturing cost pools that constitute the sales and administrative overhead costs . (b) Determine the activity cost driver rates for each cost pool in part (a) (c) Determine the activity costs for the three customers using the activity cost driver rates in part (b) . (d) Construct customer profitability reports for the three customers, using the activity costs in part (c) and interpret your results .