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xercise 7-11 (Algo) Second-Stage Allocation and Margin Calculations [LO7-4, LO7-5] Foam Products, Incorporated, makes foam...

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Accounting

xercise 7-11 (Algo) Second-Stage Allocation and Margin Calculations [LO7-4, LO7-5]

Foam Products, Incorporated, makes foam seat cushions for the automotive and aerospace industries. The companys 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 Activity Rate
Supporting direct labor Number of direct labor-hours $ 9 per direct labor-hour
Batch processing Number of batches $ 96 per batch
Order processing Number of orders $ 279 per order
Customer service Number of customers $ 2,620 per customer

The company just completed a single order from Interstate Trucking for 2,400 custom seat cushions. The order was produced in three batches. Each seat cushion required 0.6 direct labor-hours. The selling price was $142.10 per unit, the direct materials cost was $106 per unit, and the direct labor cost was $14.70 per unit. This was Interstate Truckings only order during the year.

Required:

Calculate the customer margin on sales to Interstate Trucking for the year.

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