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Using the company's ABC system, compute the customer margin of Cell City. Sales Costs: Direct materials Direct labour Supporting manufacturing Order processing Customer service Customer margin $ 0 0

Using the company's ABC system, compute the customer margin of Cell City. Sales Costs: Direct materials Direct labour Supporting manufacturing Order processing Customer service Customer margin $ 0 0

FINANCIAL ACCOUNTING
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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The company's direct labour rate is $28 per hour. Required: Using the company's ABC system, compute the customer margin of Cell City. Sales Costs: Direct materials Direct labour Supporting manufacturing Order processing Customer service Customer margin $ 0 0
Transcribed Image Text:The company's direct labour rate is $28 per hour. Required: Using the company's ABC system, compute the customer margin of Cell City. Sales Costs: Direct materials Direct labour Supporting manufacturing Order processing Customer service Customer margin $ 0 0
nts 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 Activity Rates $2 per direct labour-hour $28 per order $69 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: Number of cases Number of orders Direct labour-hours per case Selling price per case Direct materials cost per case Standard Model 280 5 0.25 $ 48 $25 Deluxe Model 100 2 0.40 $ 68 $28
Transcribed Image Text:nts 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 Activity Rates $2 per direct labour-hour $28 per order $69 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: Number of cases Number of orders Direct labour-hours per case Selling price per case Direct materials cost per case Standard Model 280 5 0.25 $ 48 $25 Deluxe Model 100 2 0.40 $ 68 $28
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