Item6

Item 6

Exercise 5-11 (Algo) Second-Stage Allocation and Margin Calculations [LO5-4, LO5-5]

Foam Products, Incorporated, 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	$ 13	per direct labor-hour
Batch processing	Number of batches	$ 90	per batch
Order processing	Number of orders	$ 282	per order
Customer service	Number of customers	$ 2,627	per customer

The company just completed a single order from Interstate Trucking for 2,400 custom seat cushions. The order was produced in three batches. Each seat cushion required 0.4 direct labor-hours. The selling price was $142.30 per unit, the direct materials cost was $110 per unit, and the direct labor cost was $13.60 per unit. This was Interstate Truckings only order during the year.

Required:

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