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Foam Products, Inc., makes foam seat cushions for the automotive and aerospace industries. The company’s activity-based...

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Accounting

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 PoolActivityMeasureActivity Rate
Supporting direct laborNumber of directlabor-hours$9per directlabor-hour
Batch processingNumber of batches$93per batch
Order processingNumber of orders$284per order
Customer serviceNumber of customers$2,639per 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.

Answer & Explanation Solved by verified expert
4.4 Ratings (788 Votes)
Solution Here we are given as follow No of order 1 order No of batches 3 Batches No of seats 2200 direct laborhours 07 selling price 14190 per unit direct materials 103 per unit direct labor    See Answer
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