Second-Stage Allocation and Margin Calculations [LO4, LO5]

Theatre Seating, Inc., makes high-quality adjustable seats for theaters. The company’s activitybased costing system has four activity cost pools, which are listed below along with their activity measures and activity rates:

The company just completed a single order from CineMax Entertainment Corporation for 2,400 custom seats. The order was produced in four batches. Each seat required 0.8 direct laborhours.
The selling price was $137.95 per seat, the direct materials cost was $112.00 per seat, and the direct labor cost was $14.40 per seat. This was the only order from CineMax Entertainment for the year.

Required:
Using Exhibit 7–11 as a guide, prepare a report showing the customer margin on sales to CineMax Entertainment for the year.

Transcribed Image Text:

Activity Cost Pool Supporting direct labor. Batch processing Order processing Customer service Activity Measure Number of direct labor-hours Number of batches Number of orders Number of customers Activity Rate $12 per direct labor-hour $96 per batch $284 per order $2,620 per customer