Colby Company makes cases for cell phones of all sizes and types for sale through specialty...

Transcribed Image Text:

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 Order processing Supporting manufacturing Customer service Activity Rates $3 per direct labour-hour $15 per order $50 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: Number of cases Number of orders Direct labour-hours per case Selling price per case Direct materials cost per case The company's direct labour rate is $19 per hour. Required: Standard Deluxe Model 120 Model 35 5 2 0.20 0.40 $ 35 $ 55 $ 10 $ 12 Using the company's ABC system, compute the customer margin of Cell City. Sales Costs: Direct materials Direct labour Supporting manufacturing Order processing Customer service Customer margin 0 $ 0 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 Order processing Supporting manufacturing Customer service Activity Rates $3 per direct labour-hour $15 per order $50 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: Number of cases Number of orders Direct labour-hours per case Selling price per case Direct materials cost per case The company's direct labour rate is $19 per hour. Required: Standard Deluxe Model 120 Model 35 5 2 0.20 0.40 $ 35 $ 55 $ 10 $ 12 Using the company's ABC system, compute the customer margin of Cell City. Sales Costs: Direct materials Direct labour Supporting manufacturing Order processing Customer service Customer margin 0 $ 0