Question 5

Foam Products, Inc., 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 Supporting direct labor Batch procesaing Order processing Customer service Activity Measure nctivity Rate 11 per direct labor-hour 98 per batch Number of direct labor-hours Mumber of batches Mumber of orders Number of customers $285 per order $ 2,608 per customer The company just completed a single order from Interstate Trucking for 2,800 custom seat cushions. The order was produced in two batches. Each seat cushion required 0.5 direct labor-hours. The selling price was $142.30 per unit, the direct materials cost was $106 per unit, and the direct labor cost was $14.70 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. ing Customer Margin-ABC Analysis Costs: Customer margin