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Construct and Interpret a Product Profitability ReportAllocating Selling and Administrative Expenses

Naper Incmanufactures power equipmentNaper has two primary products-generators and air compressorsThe following report was prepared by the controller for Naper's senior marketing management for the year ended December 31:

Construct and Interpect a Product Profitabihy Repont, Allocating Seling and Mdministrative Expenses marketing managenent foc the year ended December 31 The makkbing management team was concerned that the seling and adrinatratove expenses were noc traced to the products. Marketng management believed that some products consumed larger amounts of selling and adininistrative oxperse than did other products. To vendy this, the controller was osked to' prepare a complete product prpfitabilky report, wativ activivy bacod costing. The controler determened that selling and admenistrantive expersev consisted of two activitien: sules order processing and post sale customier service. The controller was able to determice the activaty base and activity rate for each activity, as follows? The controllet determined the following activity base usage information about each preduct. a. Determine the actvity cost of each product for sales order processing and post-sale customer service activities. b. Use the information in (a) to prepare a complete product profitabilty repost dated for the year ended Deceinber a1. Caiculate the gross profit to sales and the income from operations to sales percentages for each product Round percentages to two decamal places. Enter all amounts as positive numbers

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