1. Management felt the easiest way to allocate the sales and support costs was based on...

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1. Management felt the easiest way to allocate the sales and support costs was based on the total revenue. Using total revenue as the allocation base, determine the profitability of each of the five customers. 2. Management felt that because the data revealed some customers require a disproportionate share of sales and support resources, activity-based costing should be used to determine customer profitability. Use ABC to prepare a customer profitability analysis. Visit Phone Customer Revenue Gross Profit Days Modifications Minutes Electronic Communications A $ 400,000 $ 150,000 15 15 1,030 625 B 500,000 200,000 25 15 1,120 875 600,000 230,000 40 40 1,370 1,000 D 1,000,000 420,000 90 60 1,720 2,000 E 1,500,000 590,000 100 70 2,120 2,250 Totals $4,000,000 $1,590,000 270 200 7,360 6,750 1. Management felt the easiest way to allocate the sales and support costs was based on the total revenue. Using total revenue as the allocation base, determine the profitability of each of the five customers. 2. Management felt that because the data revealed some customers require a disproportionate share of sales and support resources, activity-based costing should be used to determine customer profitability. Use ABC to prepare a customer profitability analysis. Visit Phone Customer Revenue Gross Profit Days Modifications Minutes Electronic Communications A $ 400,000 $ 150,000 15 15 1,030 625 B 500,000 200,000 25 15 1,120 875 600,000 230,000 40 40 1,370 1,000 D 1,000,000 420,000 90 60 1,720 2,000 E 1,500,000 590,000 100 70 2,120 2,250 Totals $4,000,000 $1,590,000 270 200 7,360 6,750