Using the company’s activity-based –costing system, compute the customer margin  of Roxy Tires for both standard and custom design model.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

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

     

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.

 

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education