Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Foam Products, Incorporated, 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, Incorporated, 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 $ 91 per batch
Order processing Number of orders $ 276 per order
Customer service Number of customers $ 2,611 per customer

The company just completed a single order from Interstate Trucking for 2,200 custom seat cushions. The order was produced in five batches. Each seat cushion required 0.7 direct labor-hour. The selling price was $142.10 per unit, the direct materials cost was $111 per unit, and the direct labor cost was $14.70 per unit. This was Interstate Truckings only order during the year.

Required:

Calculate the customer margin for Interstate Trucking.

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_2

Step: 3

blur-text-image_3

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

Financial Accounting For MBAs

Authors: Peter D. Easton, John J. Wild, Robert F. Halsey, Mary Lea McAnally

6th Edition

161853100X, 978-1618531001

More Books

Students also viewed these Accounting questions

Question

6 How can an organisation increase its flexibility?

Answered: 1 week ago

Question

1.6 Identify ways that country culture influences global business.

Answered: 1 week ago