Foam Products, Inc., makes foam seat cushions for the automotive and aerospace industries. The company’s activity-based...
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Foam Products, Inc., makes foam seat cushions for the automotiveand aerospace industries. The company’s activity-based costingsystem has four activity cost pools, which are listed below alongwith their activity measures and activity rates:
Activity Cost Pool ActivityMeasure Activity Rate Supporting direct labor Number of directlabor-hours $ 9 per directlabor-hour Batch processing Number of batches $ 93 per batch Order processing Number of orders $ 284 per order Customer service Number of customers $ 2,639 per customer
The company just completed a single order from InterstateTrucking for 2,200 custom seat cushions. The order was produced inthree batches. Each seat cushion required 0.7 direct labor-hours.The selling price was $141.90 per unit, the direct materials costwas $103 per unit, and the direct labor cost was $14.30 per unit.This was Interstate Trucking’s only order during the year.
Required:
Calculate the customer margin on sales to Interstate Truckingfor the year.
Foam Products, Inc., makes foam seat cushions for the automotiveand aerospace industries. The company’s activity-based costingsystem has four activity cost pools, which are listed below alongwith their activity measures and activity rates:
| Activity Cost Pool | ActivityMeasure | Activity Rate | ||
| Supporting direct labor | Number of directlabor-hours | $ | 9 | per directlabor-hour |
| Batch processing | Number of batches | $ | 93 | per batch |
| Order processing | Number of orders | $ | 284 | per order |
| Customer service | Number of customers | $ | 2,639 | per customer |
The company just completed a single order from InterstateTrucking for 2,200 custom seat cushions. The order was produced inthree batches. Each seat cushion required 0.7 direct labor-hours.The selling price was $141.90 per unit, the direct materials costwas $103 per unit, and the direct labor cost was $14.30 per unit.This was Interstate Trucking’s only order during the year.
Required:
Calculate the customer margin on sales to Interstate Truckingfor the year.
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