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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

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 Activity Rates
Supporting manufacturing $ 2 per direct labour-hour
Order processing $ 18 per order
Customer service $ 59 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 months:
Standard Model Deluxe Model
Number of cases 18050
Number of orders 52
Direct labour-hours per case 0.250.40
Selling price per case $ 38 $ 58
Direct materials cost per case $ 15 $ 18
The companys direct labour rate is $18 per hour.
Required: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 Activity Rates
Supporting manufacturing $2 per direct labour-hour
Order processing $18 per order
Customer service $59 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 months:
The company's direct labour rate is $18 per hour.
Required:
Using the company's ABC system, compute the customer margin of Cell City.
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