Foam Products, Ic., 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 Supporting direct labor Batch processing Order processing Activity Measure Number of direct labor-hours Activity Rate 2$ 2$ 2$ 12 per direct labor-hour 98 per batch 271 per order $ 2,610 per customer Number of batches Number of orders Customer service Number of customers The company just completed a single order from Interstate Trucking for 2,100 custom seat cushions. The order was produced in two batches. Each seat cushion required 0.4 direct labor-hours. The selling price was $142.30 per unit, the direct materials cost was $103 per unit, and the direct labor cost was $14.50 per unit. This was Interstate Trucking's only order during the year. Required: Calculate the customer margin on sales to Interstate Trucking for the year. Interstate Trucking Customer Margin-ABC Analysis
Foam Products, Ic., makes foam seat cushions for the automotive and aerospace industries. The company's activity-based costing system has four activity cost pools, which are listed below along with their activity measures and activity rates: Activity Cost Pool Supporting direct labor Batch processing Order processing Activity Measure Number of direct labor-hours Activity Rate 2$ 2$ 2$ 12 per direct labor-hour 98 per batch 271 per order $ 2,610 per customer Number of batches Number of orders Customer service Number of customers The company just completed a single order from Interstate Trucking for 2,100 custom seat cushions. The order was produced in two batches. Each seat cushion required 0.4 direct labor-hours. The selling price was $142.30 per unit, the direct materials cost was $103 per unit, and the direct labor cost was $14.50 per unit. This was Interstate Trucking's only order during the year. Required: Calculate the customer margin on sales to Interstate Trucking for the year. Interstate Trucking Customer Margin-ABC Analysis
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter4: Job-order Costing And Overhead Application
Section: Chapter Questions
Problem 27BEA: Use the following information for Brief Exercises 4-27 and 4-28: Quillen Company manufactures a...
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:Foam Products, Ic., 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
Supporting direct labor
Batch processing
Order processing
Customer service
Activity Measure
Number of direct labor-hours
Activity Rate
12 per direct labor-hour
98 per batch
271 per order
$ 2,610 per customer
2$
2$
Number of batches
Number of orders
2$
Number of customers
The company just completed a single order from Interstate Trucking for 2,100 custom seat cushions. The order was produced in two
batches. Each seat cushion required 0.4 direct labor-hours. The selling price was $142.30 per unit, the direct materials cost was $103
per unit, and the direct labor cost was $14.50 per unit. This was Interstate Trucking's only order during the year.
Required:
Calculate the customer margin on sales to Interstate Trucking for the year.
Interstate Trucking
Customer Margin-ABC Analysis
Costs:
Customer margin
$
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