Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

$

13

per direct labor-hour

Batch processing

Number of batches

$

92

per batch

Order processing

Number of orders

$

273

per order

Customer service

Number of customers

$

2,636

per customer

The company just completed a single order from Interstate Trucking for 2,400 custom seat cushions. The order was produced in two batches. Each seat cushion required 0.7 direct labor-hours. The selling price was $142.40 per unit, the direct materials cost was $110 per unit, and the direct labor cost was $14.20 per unit. This was Interstate Truckings only order during the year.

Required:

Calculate the customer margin on sales to Interstate Trucking for the year.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Design Of Cost Management Systems

Authors: Robin Cooper, Robert S. Kaplan

2nd Edition

0135704170, 978-0135704172

More Books

Students also viewed these Accounting questions