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 $ 15 per direct labor-hour
Batch processing Number of batches $ 93 per batch
Order processing Number of orders $ 285 per order
Customer service Number of customers $ 2,609 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 $141.90 per unit, the direct materials cost was $109 per unit, and the direct labor cost was $13.50 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: Customer marginStep by Step Solution
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