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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![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
Sales
Costs:
Direct materials
Direct labour
Supporting manufacturing
Order processing
Customer service
The company's direct labour rate is $30 per hour.
Required:
Using the company's ABC system, compute the customer margin of Cell City.
Customer margin
Standard
Model
290
5
0.25
$49
$ 26
70
Deluxe
Model
105
2
$
0.40
$ 69
$29
70
(70)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8ca122e4-933e-4e70-88f3-539bf73cf55d%2Ff86f0bbb-cffc-41d0-856a-b42cc48f78ff%2Fzi3rihp_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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
Sales
Costs:
Direct materials
Direct labour
Supporting manufacturing
Order processing
Customer service
The company's direct labour rate is $30 per hour.
Required:
Using the company's ABC system, compute the customer margin of Cell City.
Customer margin
Standard
Model
290
5
0.25
$49
$ 26
70
Deluxe
Model
105
2
$
0.40
$ 69
$29
70
(70)
![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
Supporting manufacturing
Order processing
Customer service
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
Activity Rates
$ 2 per direct labour-hour
$29 per order
$70 per customer
Sales
Costs:
Direct materials
Direct labour
Supporting manufacturing
Standard
Model
290
5
0.25
$49
$ 26
Deluxe
Model
105
2
The 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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8ca122e4-933e-4e70-88f3-539bf73cf55d%2Ff86f0bbb-cffc-41d0-856a-b42cc48f78ff%2F0bhwjgo_processed.jpeg&w=3840&q=75)
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
Supporting manufacturing
Order processing
Customer service
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
Activity Rates
$ 2 per direct labour-hour
$29 per order
$70 per customer
Sales
Costs:
Direct materials
Direct labour
Supporting manufacturing
Standard
Model
290
5
0.25
$49
$ 26
Deluxe
Model
105
2
The 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
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