Foam Products, Incorporated, 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:Activity Cost PoolActivity MeasureActivity RateSupporting direct laborNumber of direct labor-hours$ 14per direct labor-hourBatch processingNumber of batches$ 90per batchOrder processingNumber of orders$ 287per orderCustomer serviceNumber of customers$ 2,608per customerThe company just completed a single order from Interstate Trucking for 2,900 custom seat cushions. The order was produced in three batches. Each seat cushion required 0.4 direct labor-hour. The selling price was $142.30 per unit, the direct materials cost was $110 per unit, and the direct labor cost was $14.40 per unit. This was Interstate Trucking’s only order during the year.Required:Calculate the customer margin for Interstate Trucking.

The total revenue is calculated by multiplying the selling price per unit by the number of units…

Answered: Foam Products, Incorporated, makes foam…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Foam Products, Incorporated, 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:

Activity Cost Pool	Activity Measure	Activity Rate
Supporting direct labor	Number of direct labor-hours	$ 14	per direct labor-hour
Batch processing	Number of batches	$ 90	per batch
Order processing	Number of orders	$ 287	per order
Customer service	Number of customers	$ 2,608	per customer

The company just completed a single order from Interstate Trucking for 2,900 custom seat cushions. The order was produced in three batches. Each seat cushion required 0.4 direct labor-hour. The selling price was $142.30 per unit, the direct materials cost was $110 per unit, and the direct labor cost was $14.40 per unit. This was Interstate Trucking’s only order during the year.