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 Cost Pool Activity Rates Supporting manufacturing $ per direct labourhour Order processing $ per order Customer service $ 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 months: Standard Model Deluxe Model Number of cases Number of orders Direct labourhours per case Selling price per case $ $ Direct materials cost per case $ $ The companys direct labour rate is $ per hour. Required: Using the companys ABC system, compute the customer margin of Cell City.
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 Cost Pool Activity Rates
Supporting manufacturing $ per direct labourhour
Order processing $ per order
Customer service $ 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 months:
Standard Model Deluxe Model
Number of cases
Number of orders
Direct labourhours per case
Selling price per case $ $
Direct materials cost per case $ $
The companys direct labour rate is $ per hour.
Required:
Using the companys ABC system, compute the customer margin of Cell City.
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