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: The company's direct labor rate is $18 per hour. Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters. (Do not round intermediate calculations.)

Explanation / Answer

Sales $       27,720.00 Less: Costs Direct Materials $       7,892.00 Direct Labor $       8,874.00 Supporting Direct Labor $       8,874.00 Order Processing $         752.00 Custom Designing $         518.00 Customer Service $         432.00 $      27,342.00 Customer Margin $           378.00 Big Sky Outfitters Margin would be $378.00

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