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 Bateh processing Order processing Customer service Metivity measure Number of direct labor-hours Number of batches Number of orders Number of customers Activity Rate $ 11 per direct labor-har $ B7 per batch 2B7 per order $ 2,638 per customer The company just completed a single order from Interstate Trucking for 2.200 custom seat cushions. The order was produced in two batches. Each seat cushion required 07 direct labor hours. The selling price was $142.10 per unit, the direct materials cost was $110 per unit, and the direct labor cost was $14.50 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

Interstate Trucking
Customer Margin—ABC Analysis
Revenue		312620	=2200*142.10
Costs:
Direct materials	242000		=2200*110
Direct labor	31900		=2200*14.50
Supporting Direct labor	16940		=2200*0.7*11
Batch processing	174		=2*87
Order processing	287
Customer service overhead	2638
		293939
Customer margin		18681