Foam Products, Inc., makes foam seat cushions for the automotive and aerospace i
ID: 2518570 • Letter: F
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:
The company just completed a single order from Interstate Trucking for 1,800 custom seat cushions. The order was produced in three batches. Each seat cushion required 0.4 direct labor-hours. The selling price was $142.40 per unit, the direct materials cost was $105 per unit, and the direct labor cost was $14.30 per unit. This was Interstate Trucking’s only order during the year.
Prepare a report showing the customer margin on sales to Interstate Trucking for the year.
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:
Explanation / Answer
Customer Margin—ABC Analysis Sales 256320 =1800*142.4 Costs: Direct materials 189000 =1800*105 Direct labor 25740 =1800*14.3 Supporting direct labor 10080 =1800*0.4*14 Batch processing 276 =3*92 Order processing 282 Customer service overhead 2638 228016 Customer margin 28304