Thermal Rising, Inc. makes paragliders for sale through specialty sporting goods

ID: 2607499 • 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 $ 16 per direct labor-hour Supporting direct labor Order processing Custom design processing Customer service 192 per order $ 254 per custom design $ 432 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 ModelDesign Number of gliders Number of orders Number of custom designs Direct labor-hours per glider Selling price per glider Direct materials cost per glider 33.00 $ 1,600 $2,380 $452 576 29.50 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. (Do not round intermediate calculations. Round your final answer to the nearest dollar.) ustomer margin

Explanation / Answer

Particulars

Standard Model

Custom Design

Total

Sales

22400

7140

29540

(1600*14)

(2380*3)

Costs:

Direct Material Cost

6328

1728

8056

(452*14)

(576*3)

Direct Labour

8260

1980

10240

(29.50*14*20)

(33*3*20)

Supporting Direct Labour

6608

1584

8192

(29.50*14*16)

(33*3*16)

Order Processing

192

576

768

(192*1)

(192*3)

Custom Desinging Processing

762

(254*0)

(254*3)

Customer Service

432

Customer Margin (29540 - 8056 - 10240 - 8192 - 768 - 762 - 432)

1090