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	Activity Measure	Activity Rate
Supporting direct labor	Number of direct labor-hours		$ 13	per direct labor-hour
Batch processing	Number of batches		$ 94	per batch
Order processing	Number of orders		$ 289	per order
Customer service	Number of customers		$ 2,622	per customer

  

The company just completed a single order from Interstate Trucking for 2,300 custom seat cushions. The order was produced in two batches. Each seat cushion required 0.5 direct labor-hours. The selling price was $141.60 per unit, the direct materials cost was $112 per unit, and the direct labor cost was $14.00 per unit. This was Interstate Trucking’s only order during the year.

  

Required:

Prepare a report showing the customer margin on sales to Interstate Trucking for the year.

Interstate Trucking Customer Margin—ABC Analysis       Costs:                                                   0 Customer margin   $0

Answer 1