80.2K

Verified Solution

Link Copied!

Allocating selling and administrative expenses using activity$-$based costing

Shrute Inc. manufactures office copiers, which are sold to retailers. The price and cost of goods sold for each copier are as follows:

Price

$$710$ per unit

Cost of goods sold

$(430)$

Gross profit

$$280$ per unit

In addition, the company incurs selling and administrative expenses of $$214,160.$ The company wishes to assign these costs to its three major retail

customers, The Warehouse, Kosmo Co$.,$ and Supply Universe. These expenses are related to its three major nonmanufacturing activities: customer service,

sales order processing, and advertising support. The advertising support is in the form of advertisements that are placed by Shrute Inc. to support the

retailer's sale of Shrute copiers to consumers. The budgeted activity costs and activity bases associated with these activities are:

Activity$-$base usage and unit volume information for the three customers is as follows:

Required:

Determine the activity rates for each of the three nonmanufacturing activities. Round to the nearest whole dollar.

Activity Rate

Determine the activity costs allocated to the three customers, using the activity rates in $(1).$

Activity Costs

Construct customer profitability reports for the three customers, dated for the year ended December $31,$ using the activity costs in $(2).$ The reports

should disclose the gross profit and operating income associated with each customer.

Shrute Inc.

Customer Profitability Report

For the Year Ended December $31$

PLease ANSWER all thank you!!

Answer & Explanation Solved by verified expert

See Answer