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 | $ | 14 | per direct labor-hour |
Batch processing | Number of batches | $ | 96 | per batch |
Order processing | Number of orders | $ | 275 | per order |
Customer service | Number of customers | $ | 2,601 | per customer |
The company just completed a single order from Interstate Trucking for 2,800 custom seat cushions. The order was produced in five batches. Each seat cushion required 0.8 direct labor-hours. The selling price was $141.70 per unit, the direct materials cost was $108 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.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started