Fresno Fiber Optics, Inc.

manufactures fiber optic cables for the computer

and telecommunication industries. At the request of the company VP of
marketing, the cost management staff has recently completed a customer-
profitability study. The following activity-based costing information was
the basis for the analysis.

Customer - Related Activities Cost Driver Base Cost Driver Rate

Sales activity Sales visits $860
Billing and Collection Invoices 160
Order taking Purchase orders 220
Special shipping Shipments 430

Customer - Related Activities Trace Telecom Caltex Computer

Sales activity 14 visits 18 visits
Billing and Collection 22 invoices 26 invoices
Order taking 26 orders 28 orders
Special shipping 12 shipments 14 shipments

Trace Telecom Caltex Computer

Sales revenue $240,000 $226,000
Cost of goods sold 140,000 110,000
General selling costs 42,000 32,000
General administrative costs 24,000 18,000

Required:
1. Prepare a customer profitability analysis for Trace Telecom and Caltex Computer.
Customer related Trace Telecom Caltex Computer
costs:

$12,040.00 $15,480
Sales activity
Billing and Collection $3,520.00 $4,160.00
Order taking $5,720.00 $6,160.00
Special shipping $5,160.00 $6,020.00
Total Customer
Related Cost $ 26,440.00 $31,820