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6. Muscat Sports company makes shoes for sale through specialty sporting goods stores. The company has a standard shoe model and custom designed shoes. Management
6. Muscat Sports company makes shoes for sale through specialty sporting goods stores. The company has a standard shoe model and custom designed shoes. Management has designed an activity based costing with the following activity cost pools and activity rates: Activity cost pool Activity Rate Supporting manufacturing $9 per direct labor hour Order processing $8 per order Custom designing $13 per custom design Customer service $2 per customer Management would like an analysis of the profitability of a particular customer, Khamis Footwear, which has ordered the following products over the last 12 months. Standard Customer Model Design Number of shoes 100 20 Number of orders 13 Number of custom designs 0 20 Direct labor-hours per shoe 10 Selling price per shoe $85 $150 Direct Materials cost per shoe $3 $7 The company's direct labor rate is $7 per hour. Required: Using the company's activity-based costing system, compute the customer margin of Khamis footwear
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