Management would like an analysis of the profitability of a particular customer, Cell City, which has ordered the following products overthe last 12 months:Number of casesNumber of orders.Direct labour-hours per caseSelling price per case.Direct materials cost per caseSalesCosts:Direct materialsDirect labourSupporting manufacturingOrder processingCustomer serviceThe company's direct labour rate is $30 per hour.Required:Using the company's ABC system, compute the customer margin of Cell City.Customer marginStandardModel29050.25$49$ 2670DeluxeModel1052$0.40$ 69$2970(70) Colby Company makes cases for cell phones of all sizes and types for sale through specialty retailers. The company makes a standardmodel for the most recent iPhone as well as a deluxe model. Management has designed an ABC system with the following activity costpools and activity rates for these models:Activity Cost PoolSupporting manufacturingOrder processingCustomer serviceManagement would like an analysis of the profitability of a particular customer, Cell City, which has ordered the following products overthe last 12 months;Number of casesNumber of orders.Direct labour-hours per caseSelling price per caseDirect materials cost per caseActivity Rates$ 2 per direct labour-hour$29 per order$70 per customerSalesCosts:Direct materialsDirect labourSupporting manufacturingStandardModel29050.25$49$ 26DeluxeModel1052The company's direct labour rate is $30 per hour.Required:Using the company's ABC system, compute the customer margin of Cell City.0.40$ 69$ 29

The net income is calculated as the difference between revenue and expenses. The customer margin is…

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 Standard Model 290 5 Sales 0.25 49 26 $ $ Deluxe Model 105 2 0.40 $ 69 $ 29 The company's direct labour rate is $30 per hour. Required: Using the company's ABC system, compute the customer margin of Cell City.

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 Standard Model 290 5 Sales 0.25 49 26 $ $ Deluxe Model 105 2 0.40 $ 69 $ 29 The company's direct labour rate is $30 per hour. Required: Using the company's ABC system, compute the customer margin of Cell City.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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 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 Rates Activity Cost Pool Supporting manufacturing $2 per direct labour-hour $27 per order Order processing Customer service. $68 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 95 Number of cases 270 Number of orders Direct labour-hours per case. 5 0.25 47 2 0.40 67 Selling price per case $ $ $ 27 Direct materials cost per case $ 24 The company's direct labour rate is $28 per hour. Required: Using the company's ABC system, compute the customer margin of Cell City. Customer margin
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