Schneider Electric manufactures power distribution equipment for commercial customers, such as hospitals and manufacturers. Activity-based costing was
Question:
Schneider Electric manufactures power distribution equipment for commercial customers, such as hospitals and manufacturers. Activity-based costing was used to determine customer profitability. Customer service activities were assigned to individual customers, using the following assumed customer service activities, activity base, and activity rate:
Customer Service Activity Activity Base Activity Rate
Bid preparation...............Number of bid requests. .............................$400 per request
Shipment.........................Number of shipments..............................$ 80 per shipment
Support standard items...Number of standard items ordered.....................$ 25 per std. item
Support nonstandard items.....Number of nonstandard items ordered....$150 per nonstd. item
Assume that the company had the following gross profit information for three representative customers:
The administrative records indicated that the activity-base usage quantities for each customer were as follows:
A. Prepare a customer profitability report dated for the year ended December 31, 20Y8, showing (1) the income from operations after customer service activities, (2) the gross profit as a percent of sales, and (3) the income from operations after customer service activities as a percent of sales. Prepare the report with a column for each customer. Round percentages to the nearest whole percent.
B. Interpret the report in part (A).
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
Step by Step Answer:
Financial And Managerial Accounting
ISBN: 9781337119207
14th Edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac