Q20

Tristan Industries, Inc., makes heavy duty shock absorbers designed for off-road vehicles. The company's ABC costing system has four cost pools, which are listed below with their activity measures and activity rates: Activity Cost Pool Supporting direct labor Match processing Order processing Customer service Activity Measure Number of direct labor-hours Number of batches Number of orders Number of customers Activity Rate $ 14 per direct labor-hour $ 93 per batch $ 285 per order $ 2,633 per customer The company just completed a single order from Trail Blazers Company for 2,100 shock absorbers. The order was produced in two batches. Each shock absorber required 0.4 direct labor-hours. The selling price was $141.40 per unit, the direct materials cost was $110 per unit, and the direct labor cost was $13.80 per unit. This was Trail Blazer's only order during the year. Required: Calculate the customer margin on sales to Trail Blazers for the year. Trail Blazer Company Customer Margin-ABC Analysis Sales $ 341,520 Costs: Direct materials Direct labor Supporting direct labor Batch processing Order processing Customer service overhead 0 Customer margin $ 341,520