Question

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 processing Order processing Customer service Activity Measure Number of direct labor-hours Number of batches Number of orders Number of customers $ $ $ $ Activity Rate 14 per direct labor-hour 89 per batch 276 per order 2,610 per customer The company just completed a single order from Interstate Trucking for 2,000 custom seat cushions. The order was produced in four batches. Each seat cushion required 0.4 direct labor-hours. The selling price was $141.80 per unit, the direct materials cost was $108 per unit, and the direct labor cost was $14.10 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. Interstate Trucking Customer Margin-ABC Analysis Costs: Customer margin

Answer 1

7)

Interstate Trucking
Customer Margin- ABC Analysis
Sales		283,600.00
Costs
Direct Materials	216,000.00
Direct Labor	28,200.00
Supporting direct Labor	11,200.00
Batch Processing	356.00
Order Processing	276.00
Customer Service Overhead	2,610.00
		258,642.00
Customer Margin		24,958.00

8)

a	Batch Level
b	Product Level
c	Product, unit level
d	organization -sustaining Activity
e	Product Level
f	organization -sustaining Activity
g	organization -sustaining Activity
h	Batch Level

9)

a	Customer level
b	Product Level
c	Batch Level
d	Batch Level
e	Unit Level
f	Product Level
g	organization -sustaining
h	organization -sustaining
i	organization -sustaining