Customer Profitability Analysis

FanGear, Inc. produces metal products for universities and colleges, including items such as trailer hitch covers and license plate holders with the institutions logos and mascot likenesses, for sale by the institutions to their alumni and sports fans. FanGear produces these products in batches and uses a job costing system for determining the costs for completing each job. Each new batch requires a unique design, reconfiguring of dies and machinery to produce the product, and cleaning and maintenance of the machinery following the production run in preparation for the next batch. FanGears CFO wants to implement an activity-based costing system for allocating overhead costs to each job. The accounting department staff have gathered the following activity cost pools and per-activity rates for the latest period:

Support Activity	Driver	Cost per Driver Unit
Product design	Change orders	$100
Batch setup	Setup hours	$50
Machine maintenance	Machine hours	$40

For the latest period, FanGear produced products for three new major university customers.

Customer	Change Orders	Setup Hours	Machine Hours
Southern Utah	10	4	32
Utah Valley	6	8	48
Utah State	4	6	40

Assuming that the production run for each of the three universities results in gross profits of $10,000, calculate the profitability from each builder after taking into account the support activity required for each university customer.

Customer	Net profit
Southern Utah	Answer
Utah Valley	Answer
Utah State	Answer