1. Muscat Sports company makes shoes for sale through specialty sporting goods stores. The company has a standard shoe model and custom designed shoes. Management has designed an activity based costing with the following activity cost pools and activity rates:

Activity cost pool	Activity Rate
Supporting manufacturing	$9 per direct labor hour
Order processing	$8 per order
Custom designing	$13 per custom design
Customer service	$2 per customer

Management would like an analysis of the profitability of a particular customer, Khamis Footwear, which has ordered the following products over the last 12 months.

	Standard Model	Customer Design
Number of shoes	100	20
Number of orders	1	3
Number of custom designs	0	20
Direct labor-hours per shoe	4	10
Selling price per shoe	$85	$150
Direct Materials cost per shoe	$3	$7

The companys direct labor rate is $7 per hour.

Required:

Using the companys activity-based costing system, compute the customer margin of Khamis footwear. (4marks)