GCU Acc650 week 3 assignment 2019

Fresno Fiber Optics, Inc. manufactures fiber optic cables for the computer and telecommunications

industries. At the request of the company vice president 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  ......................................$1,000

Order taking  ..................................................... Purchase orders  ................................200

Special handling  ............................................... Units handled ......................................50

Special shipping ................................................ Shipments  ..........................................500

 Cost-driver data for two of Fresno’s customers for the most recent year are

Customer-Related Activities  Trace Telecom  Caltex Computer

Sales activity ....................................................  8 visits  ........................................................    6 visits

Order taking  ....................................................  15 orders  ......................................................   20 orders

Special handling  .............................................. 800 units handled  ............................................ 600 units handled

Special shipping ...............................................  18 shipments  ................................................  20 shipments

 The following additional information has been compiled for Fresno Fiber Optics for two of its

customers, Trace Telecom and Caltex Computer, for the most recent year:

  Trace Telecom  Caltex Computer

Sales revenue  ..................................................  $190,000  .......................................................  $123,800

Cost of goods sold  ...........................................   80,000  .......................................................  62,000

General selling costs  ........................................   24,000  .......................................................  18,000

General administrative costs  .............................   19,000  .......................................................  16,000

  Required:

     1.  Prepare a customer profitability analysis for Trace Telecom and Caltex Computer. ( Hint:  Refer to

 Exhibit 5–13  for guidance.) 

    2. Build a spreadsheet:  Construct an Excel spreadsheet to solve requirement (1) above. Show how

the solution will change if the following information changes: Trace Telecom’s sales revenue was

$185,000 and Caltex Computer’s cost of goods sold was $59,000.