60.1K

Verified Solution

Link Copied!

Exercise $7-11($Static$)$ Second$-$Stage Allocation and Margin Calculations $[$L$07-4,$ LO$7-5]$

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

Supporting direct labor

Batch processing

Order processing

Customer service

Activity Measure

Number of direct labor$-$hours

Number of batches

Number of orders

Number of customers

Activity Rate

The company just completed a single order from Interstate Trucking for $1,000$ custom seat cushions. The order was produced in

two batches. Each seat cushion required $0\mathrm{.}25$ direct labor$-$hours. The selling price was $$20$ per unit, the direct materials cost

was $$8\mathrm{.}50$ per unit, and the direct labor cost was $$6\mathrm{.}00$ 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. $($Round your answers to $2$ decimal places.$)$ Foam Products, Incorporated, makes foam seat cushions for the automotive and aerospace industries. The company$$s activity$-$based costing system has four activity cost pools, which are listed below along with their activity measures and activity rates: Foam Products, Incorporated, makes foam seat cushions for the automotive and aerospace industries. The company's activitybased costing system has four activity cost pools, which are listed below along with their activity measures and activity rates: The company just completed a single order from Interstate Trucking for $2,200$ custom seat cushions. The order was produced in three batches. Each seat cushion required $\backslash (0\mathrm{.}6\backslash )$ direct labor$-$hours. The selling price was $\backslash (\backslash$$ $142\mathrm{.}10\backslash )$ per unit, the direct materials cost was $\backslash (\backslash$$ $104\backslash )$ per unit, and the direct labor cost was $\backslash (\backslash$$ $13\mathrm{.}70\backslash )$ 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.

Answer & Explanation Solved by verified expert

See Answer