EXERCISE 7–14 Second-Stage Allocation and Margin Calculations
SuperClassEXERCISE 7–14 Second-Stage Allocation and Margin Calculations [LO3, LO4]
Roll Board Inc. manufactures several models of high-quality skateboards. The company’s ABC system has four activity cost pools, which are listed below along with their activity measures and activity rates:
Activity Cost Pool | ActivityMeasure | Activity Rate |
Supporting direct labour . . . . . . . . . . . . . Batch processing . . . . . . . . . . . . . . . . . . . . Order processing . . . . . . . . . . . . . . . . . . . . Customer service . . . . . . . . . . . . . . . . . . . . | Number of direct labour-hours Number of batches Number of orders Number of customers | $14 per direct labour-hour $98 per batch $173 per order $1,320 per customer |
The company just completed a single order from SkateCo for 3,200 entry-level skateboards. The order was produced in 27 batches. Each skateboard required 0.7 direct labour-hours. The selling price was $125 per skateboard, the direct materials cost was $77.50 per skateboard, and the direct labour cost was $17.50 per skateboard. This was the only order from SkateCo for the year.
Required:
Using Exhibit 7–13 as a guide, prepare a report showing the customer margin on sales to SkateCo for the year.
10 years ago
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exercise_7-14_second-stage_allocation_and_margin_calculations.xlsx
