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Category > Accounting Posted 24 Aug 2017 My Price 11.00

Roll Board Inc

EXERCISE 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

Activity Measure

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.

Answers

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Status NEW Posted 24 Aug 2017 12:08 AM My Price 11.00

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