Chapter 5, Problem 65P

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.

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

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:

Required:

1. 1. Prepare a customer profitability analysis for Trace Telecom and Caltex Computer. (Hint: Refer to Exhibit 5–13 for guidance.)
2. 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.