1) Use Activity Based Costing to calculate the customer profitability for the Standard Model.

2) Use Activity Based Costing to calculate the customer profitability for the Deluxe Model.

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 Supporting manufacturing Order processing Customer service Activity Rates $ 2 per direct labour-hour $ 21 per order $ 75 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 montho: Deluxe Model Standard Model 160 35 5 2 Number of cases Number of orders Direct labour-hours per case Selling price per case Direct materials cost per case 0.25 0.40 $40 $65 $12 SIS The company's direct labour rate is $24 per hour