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Al Ain Company makes a specialty product, Model-XR5 and sells them through specialty stores. The company is worried about profitability of a one of its
Al Ain Company makes a specialty product, Model-XR5 and sells them through specialty stores. The company is worried about profitability of a one of its customers, Palms Trading, and would like to make a profitability analysis for it. Palm made the following orders over the last 12 months: 10 1 0 Number of products Number of orders. Number of custom designs Direct labor-hours per product. Selling price per product. Direct materials cost per product... 28.5 .AED 1,650 AED 462 Management has designed an activity-based costing system with the following activity cost pools and activity rates: Activity Cost Pool Activity Rate Supporting direct labor AED18 per direct labor-hour Order processing AED192 per order Custom design processing AED261 per custom design Customer service. .AED426 per customer The company's direct labor rate is AED19.00 per hour. Required: Using the company's activity-based costing system, compute the customer margin of Palms
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