Question
Foam Products, Inc. makes foam seat cushions for the automotive and aerospace Industries. The company's activity-based costing system has four activity cost pools, which
Foam Products, Inc. makes foam seat cushions for the automotive and aerospace Industries. The company's activity-based costing system has four activity cost pools, which are listed below along with their activity measures and activity rates: Activity Cost Pool Supporting direct labor Batch processing order processing Customer service Activity Rate Activity Measure Number of direct labor-hours $ Number of batches Number of orders Number of customers 11 par direct labor-hour $95 per batch $ 287 per order $ 2,631 per customer The company just completed a single order from Interstate Trucking for 2,000 custom seat cushions. The order was produced in two batches. Each seat cushion required 0.3 direct labor-hours. The selling price was $142.30 per unit, the direct materials cost was $106 per unit, and the direct labor cost was $13.80 per unit. This was Interstate Trucking's only order during the year. Required: Calculate the customer margin on sales to Interstate Trucking for the year. Interstate Trucking Customer Margin-ABC Analysis Sales Costs Direct materials Direct labor Supporting direct labor Batch processing Order processing Customer service overhead Customer margin $ 0
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