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: Activity cost PoolActivity Rate Supporting direct labor Order processing Custom design processing Customer service $ 16 per direct labor-hour $ 192 per order $ 265 per custom design $436 per customer 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: Standard Custom Number of gliders Number of orders Number of custom designs Direct labor-hours per glider Selling price per glider Direct materials cost per glider Model Design 3 3 3 29.50 33.00 $ 1,650 $2,380 $ 462 $ 576 10 The company's direct labor rate is $20 per hour Required: Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters. (Round your intermediate calculations and final answer to the nearest whole dollar amount. Loss amounts should be entered with a minus sign.)

Explanation / Answer

Standard Model Custom Design Customer Sales 16500 7140 23640 Supporting Manufacturing 472 528 1000 29.5*16 33*16 Order Processing 384 576 960 2*192 3*192 Customer designer processing 0 795 795 3*265 Customer service 436 Direct Labour 590 660 1250 20*29.5 20*33 Direct Materials 4620 1728 6348 462*10 576*3 Customer Margin 12851

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