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:

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 1,700 custom seat cushions. The order was produced in five batches. Each seat cushion required 0.5 direct labor-hours. The selling price was $142.00 per unit, the direct materials cost was $108 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.

Explanation

Sales (1,700 seats × $142.00 per unit) = $241,400

Costs:

Direct materials ($108 per unit × 1,700 units) = $183,600

Direct labor ($14.50 per unit × 1,700 units) = $24,650

Supporting direct labor ($14 per DLH × 0.5 DLH per unit × 1,700 units) = $11,900

Batch processing ($99 per batch × 5 batches) = $495

Order processing ($284 per order × 1 order) = $284

Customer service overhead ($2,602 per customer × 1 customer) = $2,602