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. Refer to the Labels and Amount Descriptions for exact wording of text entries. Be sure to complete the statement heading. Enter all amounts as positive numbers, except for a negative income from operations. Round percentages to the one decimal place. Colons will appear automatically.

b. Interpret the report in part (a).

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 Bid preparation Shipment Support standard items Activity Base Activity Rate Number of bid requests $400 per request Number of shipments 580 per shipment Number of standard items ordered $25 per std. item Number of nonstandard items ordered $150 per nonstd. item Support nonstandard items Assume that the company had the following gross profit information for three representative customers 1 Customer 1 Customer 2 Customer 3 2 Revenue $120,000.00 $200,000.00 $160,000.00 3 Cost of goods sold 76,800.00 110,000.00 83,200.00 4 Gross profit $43,200.00 $90,000.00 $76,800.00 5 Gross profit as a percent of sales 36.0% 45.0% 48.0% The administrative records indicated that the activity-base usage quantities for each customer were as follows: Customer 1 Customer 2 Customer 3 Activity Base Number of bid requests Number of shipments 14 38 55 30 60 48 Number of standard items ordered 15 30 50 Number of nonstandard items ordered 5 70 80 Labels Customer service activities December 31, 20Y8 For the Year Ended December 31, 2048 Amount Descriptions Bid preparation Cost of goods sold Gross profit Income from operations after customer service activities Post-sale customer service Revenues Sales order processing Shipment Support standard items Support nonstandard items Total customer service activities 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. Refer to the Labels and Amount Descriptions for exact wording of text entries. Be sure to complete the statement heading. Enter all amounts as positive numbers, except for a negative income from operations. Round percentages to the one decimal place. Colons will appear automatically. Schneider Electric Customer Profitability Report (Label) 1 Customer 1 Customer 2 Customer 3 2 3 4 5 (Label) 6 7 8 9 10 11 12 Gross profit as a percentage of sales 13 Income from operations after customer service activities as a percent of sales