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 $ 11 per direct labor-hour Batch processing Number of batches $ 97 per batch Order processing Number of orders $ 288 per order Customer service Number of customers $ 2,612 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 0.7 direct labor-hours. The selling price was $141.30 per unit, the direct materials cost was $102 per unit, and the direct labor cost was $13.70 per unit. This was Interstate Truckings only order during the year. Required: Calculate the customer margin on sales to Interstate Trucking for the year.
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