EXERCISE 7–13 Second-Stage Allocation and Margin Calculations [LO4, LO5]
Theatre Seating, Inc., makes high-quality adjustable seats for theaters. 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 CineMax Entertainment Corporation for 2,400 custom seats. The order was produced in four batches. Each seat required 0.8 direct labor- hours. The selling price was $137.95 per seat, the direct materials cost was $112.00 per seat, and the direct labor cost was $14.40 per seat. This was the only order from CineMax Entertainment for the year.
Using Exhibit 7–11 as a guide, prepare a report showing the customer margin on sales to CineMax Entertainment for the year.
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