Colby Company makes cases for cell phones of all sizes and types for sale through...
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Colby Company makes cases for cell phones of all sizes and types for sale through specialty retailers. The company makes a standard model for the most recent iPhone as well as a deluxe model Management has designed an ABC system with the following activity cost pools and activity rates for these models: Activity Coat Pool Activity Rates Supporting manufacturing $ 2 per direct labour-hour Order processing $10 per order Customer service $51 per customer Management would like an analysis of the profitability of a particular customer, Cell City, which has ordered the following products over the last 12 months Number of cases Number of orders Direct labour-hours per case Selling price per case Direct materials cost per case Standard Deluxe Mode Model 100 10 5 2 0.25 0.40 $ 30 $ 50 $ 7 $ 10 The company's direct labour rate is $10 per hour. Required: Using the company's ABC system, compute the customer margin of Cell City. Customer margin
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