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ROXY Tires the manufacturer and exported company of tires. The company uses an activity based costing system for its overhead costs. The company has provided
ROXY Tires the manufacturer and exported company of tires. The company uses an activity based costing system for its overhead costs. The company has provided the following data concerning its activity-based costing system. Activity Cost pool Activity Measure Annual Activity Direct labor Hour Supporting Direct Labor $28 per DLH Order Processing Order $285 per Order Custom design Custom design processing $185 per customer design Customer service customer $378 per customer Management would like an analysis of the profitability of a particular customer. Roxy Tires, which has ordered the following products over the last 12 months: Items.. ..Standard model.. ..customer Design Number of Tires.. 20. .5 Number of orders... ....5 28 Number of customer designs......0.. Direct labor hour per Tires 26.5...... Selling price per Tires....... $1900 $2400 Direct material cost per tires...$565. ..$630 Required: Using the company's activity-based -costing system, compute the customer margin of Roxy Tires for both standard and custom design model
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