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 Pool Supporting direct labor Order processing Custom design processing Customer service Activity Rate $ 20 per direct labor-hour $ 194 per order $ 260 per custom design 434 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 Custo Model Design Number of gliders Number of orders Number of custom designs Direct labor-hours per glider Selling price per glider Direct materials cost per glider 12 1 26.50 33.00 $1,750 $2,350 444 568 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

Revenue 28050 =(1750*12)+(2350*3) Expenses: Direct materials 7032 =(444*12)+(568*3) Direct labor 8340 =(12*26.5*20)+(3*33*20) Supporting Direct labor 8340 =(12*26.5*20)+(3*33*20) Order processing 776 =(1*194)+(3*194) Custom design processing 780 =(260*3) Customer service 434 Total expenses 25702 Customer margin 2348

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