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Colby Company makes cases for cell phones of all sizes and types for sale through...

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Accounting

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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 Rates per direct labour- Activity Cost Pool Supporting manufacturing Order processing Customer service $2 hour $26 per order $92 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: Standard Deluxe Model Model Number of cases 260 90 Number of orders 5 2 Direct labour-hours per case 0.25 0.40 Selling price per case 46 $ 66 Direct materials cost per case $ 23 $ 26 The company's direct labour rate is $26 per hour. Required: Using the company's ABC system, compute the customer margin of Cell City. Sales Costs: Direct materials Direct labour Supporting manufacturing Order processing Customer service Customer margin $ 0

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