Thermal Rising, Inc., makes paragliders for sale through specialty sporting good
ID: 2476128 • Letter: T
Question
Thermal Rising, Inc., makes paragliders for sale through specialty sporting goods stores. The company I has a standard paraglider model, but also makes custom-designed paragliders. Managementiasi designed an activity-based costing system with the following activity cost pools and activity rates: Bm 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. Required: Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters. (Do not round intermediate calculations.)Explanation / Answer
Computation of Customer's Margin
Standard Model
Custom Design
No of Gliders
10
3
Selling Price
1,725
2,320
Sales
17,250
6,960
Direct material
4,420
1,716
Direct labour cost
5,310
1,782
Supporting Labour Cost
5,310
1,782
Ordering Cost
192
576
Custom Desigining Processing
-
756
Customer Service Cost
215
215
Total Cost
15,447
6,827
Customer's Margin
1,803
133
Total customer’s Margin=1,803 + 133= 1,936
*Direct Material= Direct Material Cost per Glider X No of Gliders
*Direct Labour Cost= No of Gliders x Direct labour hours per Glider x direct labor hour rate
*Supporting Labour Cost = No of Gliders x Direct labour hours per Glider x direct labor hour rate
*Ordering Cost= No of orders x cost per order
*Custome designing processing=No of custom design x Cost per design
*Customer service is divided between standard and custom as we have only one customer
Computation of Customer's Margin
Standard Model
Custom Design
No of Gliders
10
3
Selling Price
1,725
2,320
Sales
17,250
6,960
Direct material
4,420
1,716
Direct labour cost
5,310
1,782
Supporting Labour Cost
5,310
1,782
Ordering Cost
192
576
Custom Desigining Processing
-
756
Customer Service Cost
215
215
Total Cost
15,447
6,827
Customer's Margin
1,803
133
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.