Thermal Rising, Inc., makes paragliders for sale through specialty sporting good
ID: 2482437 • Letter: T
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.)
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:
Explanation / Answer
Answer to the Question
Computation of Margin of Big Sky Outfitters Standard Model Custom Design Total Direct Material cost 5,104 1,144 6,248 Direct Labor cost 6,710 1,320 8,030 Indirect Labor 5,368 1,056 6,424 Order Processing cost 368 368 736 Custom designing charges - 540 540 Customer service - - 422 Total Cost 17,550 4,428 22,400 - Sale vale ( No of Units*Selling price per unit) 19,250 4,640 23,890 - Margin ( Sales-Cost) 1,700 212 1,490Related Questions
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