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go) Second-Stage Allocation and Margin Calculations [LO7-4, LO7-5] Foam Products, Incorporated, makes foam seat cushions for the automotive and aerospace industries. The company's activity-based costing
go) Second-Stage Allocation and Margin Calculations [LO7-4, LO7-5] Foam Products, Incorporated, makes foam seat cushions for the automotive and aerospace industries. The company's 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 Supporting direct labor Number of direct labor-hours Number of customers Batch processing Order processing Customer service Number of batches Number of orders Activity Rate $13 per direct labor-hour $ 88 per batch $ 282 per order $ 2,611 per customer The company just completed a single order from Interstate Trucking for 2,600 custom seat cushions. The order was produced in four batches. Each seat cushion required 0.5 direct labor-hours. The selling price was $142.20 per unit, the direct materials cost was $106 per unit, and the direct labor cost was $14.80 per unit. This was Interstate Trucking's only order during the year. Required: Calculate the customer margin on sales to Interstate Trucking for the year. Interstate Trucking Customer Margin-ABC Analysis Sales $ 369,720 Costs: Direct materials $ 275,600 Direct labor 19,240 Supporting direct labor 15,600 Batch processing 264 Order processing 282 Customer service overhead 2,611 Customer margin 313,597 $ 56,1231
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