Thermal Rising, Inc., makes paragliders for sale through specialty sporting good

Question

Thermal Rising, Inc., makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider model, but also makes custom-designed paragliders. Management has designed an activity-based costing system with the following activity cost pools and activity rates: Management would like an analysis of the profitability of a particular customer, Big Sky Outfitters, which has ordered the following products over the last 12 months: Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters. (Do not round intermediate calculations. Round your final answer to the nearest dollar.)

Explanation / Answer

Particulars Standard Model Custom Design Selling price per glider $1850 $2400 Less:Order processing 284 14.20 per glider 14.20 852 284 per glider 284 Direct materials cost per glider 564 564 634 634 Direct Labor cost 513.83 513.83 546 546 Custom design processing 0 0 558 186 per glider 186 customer service 379 18.95 per glider 18.95 379 126.34 per glider 126.34 Customer margin (41.05%) $739.02 (25.98%) $623.66

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