Please help

Construct and Interpret a Product Profitability Report, Allocating Selling and Administrative Expenses

Naper Inc. manufactures power equipment. Naper has two primary productsgenerators and air compressors. The following report was prepared by the controller for Naper's senior marketing management for the year ended December 31:

Construct and Interpret a Product Profitability Report, Allocating Selling and Administrative Expenses Naper Inc. manufactures power equipment. Naper has two primary products-generators and air compressors. The following report was prepared by the controller for Naper's senior marketing management for the year ended December 31: Air Generators Compressors Total $1,716,600 $2,825,400 $4,542,000 Revenue Cost of goods sold 1,373,280 2,260,320 3,633,600 Gross profit $343,320 $565,080 $908,400 Selling and administrative expenses 199,500 Income from operations $708,900 The marketing management team was concerned that the selling and administrative expenses were not traced to the products. Marketing management believed that some products consumed larger amounts of selling and administrative expense than did other products. To verify this, the controller was asked to prepare a complete product profitability report, using activity-based costing. The controller determined that selling and administrative expenses consisted of two activities: sales order processing and post-sale customer service. The controller was able to determine the activity base and activity rate for each activity, as shown below. , . Activity Activity Base Activity Rate Sales order processing Sales orders $40 per sales order Post-sale customer service - Service requests $290 per customer service request The controller determined the following activity-base usage information about each product: Generators Air Compressors Number of sales orders 407 738 Number of service requests 86 444 a. Determine the activity cost of each product for sales order processing and post-sale customer service activities. Sales Order Processing Post-sale Customer Service Activities Cost Activities Cost Generators $ Air Compressors Total b. Use the information in (a) to prepare a complete product profitability report dated for the year ended December 31. Calculate the gross profit to sales and the income from operations to sales percentages for each 407 738 Number of sales orders Number of service requests 86 444 a. Determine the activity cost of each product for sales order processing and post-sale customer service activities. Sales Order Processing Activities Cost Post-sale Customer Service Activities Cost Generators $ Air Compressors Total $ $ b. Use the information in (a) to prepare a complete product profitability report dated for the year ended December 31. Calculate the gross profit to sales and the income from operations to sales percentages for each product. Round percentages to one decimal place. Enter all amounts as positive numbers. Naper Inc. Product Profitability Report For the Year Ended December 31 Generators Air Compressors Total Revenues Cost of goods sold Gross profit $ 5 Sales order processing $ S Post-sale customer service Total selling and administrative expense 5 Income from opera Gross profit as a percentage of sales Income from operations a percentage of sales C. Interpret the product profitability report. user of Naper's sales and service activities. Many factors cause the air The air compressors have the compressors to have income from operations to sales percentage because the product is a income from operations as a percent of sales than generators