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Korvikt [17]
3 years ago
8

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: Activity Cost Pool Activity Measure Activity Rate Supporting direct labor Number of direct labor-hours $ 5.55 per direct labor-hour Batch processing Number of batches $ 107.00 per batch Order processing Number of orders $ 275.00 per order Customer service Number of customers $ 2,463.00 per customer The company just completed a single order from Interstate Trucking for 1,000 custom seat cushions. The order was produced in two batches. Each seat cushion required 0.25 direct labor-hours. The selling price was $20 per unit, the direct materials cost was $8.50 per unit, and the direct labor cost was $6.00 per unit. This was Interstate Trucking’s only order during the year. Required: Prepare a report showing the customer margin on sales to Interstate Trucking for the year.
Business
1 answer:
ella [17]3 years ago
7 0

Answer:

Report Showing Customer Margin

Interstate Trucking

Sales value for 1,000 custom seat cushion = $20 X 1,000                 $20,000

Less: Direct material = $8.5 X 1,000 units                                            ($8,500)

Less: Direct labor = $6 X 1,000 units                                                     ($6,000)

Less: Batch processing $107 X 2 batches                                               ($214)

Less: Direct labor hours = 1 hour/0.25 = 4 units in an hour

          Total = ($1,000/4) X $5.55 per labor hour                                   ($1,387.5)

Less: Order processing, cost per order                                                    ($275)

Less: Customer service, per customer                                                     ($2,463)

Profit on this customer                                                                              $1,160.5

Customer margin = ( $1,160.5/$20,000 )* 100 = 5.80%

   

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Question Completion:

Estimated manufacturing overhead costs = $156,000

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Answer:

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Explanation:

a) Data and Calculations:

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b) To calculate the cost driver rate, Pajamas Corp. divides the total estimated manufacturing overhead costs by the cost driver (direct labor cost).  This implies that the cost driver rate is the total cost of activity pool divided by its cost driver.  This yields the amount of overhead and indirect costs related to a particular activity.

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Explanation:

The journal entry is as follows:

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Additional paid in capital  $5,000

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(Being the common stock is issued in exchanged for cash)

The computation of the additional paid in capital is shown below:

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where,

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And, the  appraised value of land is $70,000

So, the remaining balance is

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