Question
Foam Products, Inc., makes foam seat cushions for the automotive and aerospace industries. The companys activity-based costing system has four activity cost pools, which are
Foam Products, Inc., makes foam seat cushions for the automotive and aerospace industries. The companys activity-based costing system has four activity cost pools, which are listed below along with their activity measures and activity rates: |
Activity Cost Pool | Activity Measure | Activity Rate | ||
Supporting direct labor | Number of direct labor-hours | $ 14 | per direct labor-hour | |
Batch processing | Number of batches | $ 92 | per batch | |
Order processing | Number of orders | $ 282 | per order | |
Customer service | Number of customers | $ 2,638 | per customer | |
The company just completed a single order from Interstate Trucking for 1,800 custom seat cushions. The order was produced in three batches. Each seat cushion required 0.4 direct labor-hours. The selling price was $142.40 per unit, the direct materials cost was $105 per unit, and the direct labor cost was $14.30 per unit. This was Interstate Truckings only order during the year. |
Required: | ||||||||||||||||||||||||||||||||||||||||||
Prepare a report showing the customer margin on sales to Interstate Trucking for the year. | ||||||||||||||||||||||||||||||||||||||||||
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