Using the company’s activity-based –costing system, compute the customer margin of Roxy Tires for both standard and custom design model.
ROXY Tires the manufacturer and exported company of tires. The company uses an activity based costing system for its
Activity Cost pool |
Activity Measure |
Annual Activity |
Supporting Direct Labor |
Direct labor Hour |
$28 per DLH |
Order Processing |
Order |
$285 per Order |
Custom design processing |
Custom design |
$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……………….1……………………………….5
Number of customer designs……0………………………………5
Direct labor hour per Tires 26.5…………………………….28
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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