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

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:

The company's direct labour rate is $24 per hour.

Required:

Using the company's ABC system, compute the customer margin of Cell City.

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Activity Cost Pool Activity Rates Supporting manufacturing. Order processing . Customer service.. $2 per direct labour-hour $21 per order $75 per customer Standard Model Deluxe Model Number of cases. 160 35 Number of orders . 5 2 Direct labour-hours per case Selling price per case. Direct materials cost per case 0.25 0.40 $40 $65 $12 $15