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 1,000 custom seat cushions. The order was produced in two batches. Each seat cushion required 0.25 direct labor- hours. The selling price was $20 per unit, the direct materials cost was $8.50 per unit, and the direct labor cost was $6.00 per unit. This was Interstate Trucking’s only order during the year.

Required:

Using Exhibit 8—11 as a guide, prepare a report showing the customer margin on sales to Interstate Trucking for the year.

Transcribed Image Text:

Activity Cost Pool Supporting direct labor Batch processing Activity Measwre Number of direct labor-hours Activity Rate $5.55 per direct labor-hour Number of batches $107.00 per batch $275.00 per order $2,463.00 per customer Order processing Number of orders Customer service Number of customers