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Fresno Fiber Optics, Inc.manufactures fiber optic cables for the computer
and telecommunicationindustries. At the request of the company VP of
marketing, the cost managementstaff has recently completed a customer-
profitability study. Thefollowing activity-based costing information was
the basis for theanalysis.
Customer - RelatedActivities				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 - RelatedActivities				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
The following additionalinformation 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			$240,000		$226,000
Cost of goods sold			140,000		110,000
General selling costs			42,000		32,000
General administrativecosts			24,000		18,000
Required:
1. Prepare a customerprofitability analysis for Trace Telecom and Caltex Computer.
(Hint: Refer to Exhibit 5-13for guidance).
2. Build a spreadsheet:Construct an Excel spreadsheet to solve requirement (1) above.
Show how the solution willchange if the following information changes: Trace Telecom's
cost of goods sold was$114,000 and Caltex Computer's sales revenue was $206,000.