Assume Google and Apple use activity-based costing to allocate customer support costs to products. For a similar laptop model, assume the companies report the following information.

Required

1. Compute the activity rate for the customer support cost for both Apple and Google.

2. Prepare a customer profitability report for both Apple and Google for an order from a local college for 500 laptops. Each unit sells for $1,199. Both companies budget 500 support calls for this order.

3. Which company, Apple or Google, would earn the most income from this customer?

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Product Cost per Unit Direct materials ......... Direct labor..... Overhead...... Total product cost.. Apple Google $490 $470 60 50 265 $815 260 $780 Customer Support Annual costs Annual number of calls.... Apple Google $850,000 $1,400,000 10,000 10,000