3D. Product and customer profitability analysis

LMN Excercise, Inc. manufactures portable infrared saunas. It markets and sells them to gyms and spas who in turn sell them to their individual customers. The company has a generic model but also makes customer-specific models, especially for gyms. The cost activities and their respective rates in the activity costing system of the company are as follows:

cost activity	Activity rate
Design with customer specifications	$300 for each design
Order Processing	$215 per order
Customer service	$475 per customer
Direct support labor	$19.80 per labor hour

Management has asked you for a profitability analysis of client Z. You have been provided with the following information regarding the orders of this client in the past 12 months.

Direct labor rate: $21/hour.

	generic model	Model with specifications
number of saunas	10	4
Quantity of orders	2	1
Quantity of designs with specifications	0	4
Direct labor for each sauna	31 horas	35 horas
Sale price per sauna	$2,920	$2,850
Cost of materials per sauna	$520	$630

Required: Calculate the margin or profitability of customer Z.