Exercise 7-11 Second-Stage Allocation and Margin Calculations [LO7-4, LO7-5]

Foam Products, Inc., makes foam seat cushions for the automotive and aerospace industries. The companys 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	$	9	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	$	2,632	per customer

The company just completed a single order from Interstate Trucking for 1,600 custom seat cushions. The order was produced in four batches. Each seat cushion required 0.8 direct labor-hours. The selling price was $141.40 per unit, the direct materials cost was $102 per unit, and the direct labor cost was $14.20 per unit. This was Interstate Truckings only order during the year.

Required:

Calculate the customer margin on sales to Interstate Trucking for the year.

Exercise 7-11 Second-Stage Allocation and Margin Calculations [LO7-4, LO7-5]

Foam Products, Inc., makes foam seat cushions for the automotive and aerospace industries. The companys 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	$	9	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	$	2,632	per customer

The company just completed a single order from Interstate Trucking for 1,600 custom seat cushions. The order was produced in four batches. Each seat cushion required 0.8 direct labor-hours. The selling price was $141.40 per unit, the direct materials cost was $102 per unit, and the direct labor cost was $14.20 per unit. This was Interstate Truckings only order during the year.

Required:

Calculate the customer margin on sales to Interstate Trucking for the year.

Interstate Trucking Customer Margin-ABC Analysis Batch processing Costs: Direct materials Direct labor Supporting direct labor Batch processing Order processing Customer service overhead 0 Customer margin 0