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 Activity Rate 8 per direct labor-hour 91 per batch 277 per order 2,607 per customer Number of direct labor-hours Number of batches Number of orders Number of customers $ The company just completed a single order from Interstate Trucking for 2,500 custom seat cushions. The order was produced in two batches. Each seat cushion required 0.6 direct labor-hours. The selling price was $141.30 per unit, the direct materials cost was $108 per unit, and the direct labor cost was $13.70 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 Next 7 of 13 Prev

Answer 1

CUSTOMER MARGIN - ABC ANALYSIS
Sales Revenue (2500 Untis X $ 141.30)		$        3,53,250
Costs:
Direct Material Cost ( 2500 X $ 108)	$          2,70,000
Direct Labor (2,500 X $ 13.70)	$             34,250
Overhead Cost
Supporting Direct Labor (2,500 X 0.6 ) = 25 Hrs X $ 8	$                   200
Batch Processing (2 X $ 91)	$                   182
Order Processing	$                   277
Customer Service	$                2,607
Total Cost		$        3,07,516
Customer Margin		$            45,734