Second-Stage Allocation and Margin Calculations
Theatre Seating, Inc., makes high-quality adjustable seats for theaters. The company’s activitybased 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 | $12 | per direct labor-hour |
Batch processing | Number of batches | $96 | per batch |
Order processing | Number of orders | $284 | per order |
Customer service | Number of customers | $2,620 | per customer |
The company just completed a single order from CineMax Entertainment Corporation for 2,400 custom seats. The order was produced in four batches. Each seat required 0.8 direct laborhours. The selling price was $137.95 per seat, the direct materials cost was $112.00 per seat, and the direct labor cost was $14.40 per seat. This was the only order from CineMax Entertainment for the year.
Required:
Using Exhibit 7- 11as a guide, prepare a report showing the customer margin on sales to CineMax Entertainment for the year.
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