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 | $ | 10 | per direct labor-hour |
| Batch processing | Number of batches | $ | 91 | per batch |
| Order processing | Number of orders | $ | 287 | per order |
| Customer service | Number of customers | $ | 2,621 | per customer |
The company just completed a single order from Interstate Trucking for 2,100 custom seat cushions. The order was produced in two batches. Each seat cushion required 0.6 direct labor-hours. The selling price was $141.60 per unit, the direct materials cost was $111 per unit, and the direct labor cost was $14.30 per unit. This was Interstate Truckings only order during the year.
Required:
Calculate the customer margin on sales to Interstate Trucking for the year.
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 | $ | 10 | per direct labor-hour |
| Batch processing | Number of batches | $ | 91 | per batch |
| Order processing | Number of orders | $ | 287 | per order |
| Customer service | Number of customers | $ | 2,621 | per customer |
The company just completed a single order from Interstate Trucking for 2,100 custom seat cushions. The order was produced in two batches. Each seat cushion required 0.6 direct labor-hours. The selling price was $141.60 per unit, the direct materials cost was $111 per unit, and the direct labor cost was $14.30 per unit. This was Interstate Truckings only order during the year.
Required:
Calculate the customer margin on sales to Interstate Trucking for the year.
Interstate Trucking
Customer Margin - ABC Analysis
| Costs: | ||
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Accounting
Authors: Warren S. Carl
23rd Edition
0324555865, 978-0324555868
