ABC Costing Question. An illegal company that shouldn't be a company is secretly making products and you are an undercover accountant and this black-market company that is making an illegal product called Michael Burry the man. The illegal product has a 30% markup to make sure expenses are all paid at some point. Over the years the profit of this illegal company is going downhill, and the legal company wants to try ABC costing to help understand how to get better profit.

In the record there were two customers of this illegal product - one had a code name called Connor and the other customer name is Haytham. Both customers bought the product Michael Burry the man. The cost for the illegal company to purchase from their manufacturers is $50,000.

	Activity
Activity Measure	Haytham	Connor
number of orders	12	10
number of items picked	35	31
number of machine setups	2	1
Number of deliveries	33	18

A Detective that infiltrated the company stole this data for you to look at:

Activity cost pool	Cost Driver	Cost (total)	Activity (total)
line item picking	number of line items picked	$90,000	10,000 line items
Customer deliveries	number of deliveries	$500,000	3000 deliveries
machine setups	number of machine setups	$100,000	80 setups
order processing	number of orders	$200,000	1000 orders
other company costs	not applicable	$600,000
selling and administrative costs (total)		$2,000,000

A) Calculate the activity rate for all the activity cost pools provided for you

b) Calculate the total activity cost that are assigned to both Haytham and Connor, the customers

C) Calculate the illegal companys customer margin for the suspicious customers given to you; Haytham and Connor