1. Prepare a customer profitability report dated for the year ended December 31, 2014, 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. Enter all amounts as positive numbers.
Solution
Customer Profitability Report:
Customer 1 Customer 2 Customer 3
Revenue 39,000 26,000 31,200
Cost of Goods Sold 24,180 13,520 15,600
Gross Profit 14,820 12,480 15,600
Customer Service Activities:
Bid Preparation 2,400 1,600 5,000
Shipment 256 384 720
Support Standard Items 960 760 1,120
Support Non Standard Items 1,350 2,250 1,800
Total Customer Service Activities 4,966 4,994 8,640
Income From Operation after Customer S A 9,854 7,486 6,960
Gross Profit as a % of Sales (GP / Sales) 38% 48% 50%
Income From Operation after CSA as a % of Sl 25% 29% 22%