hermal Rising, Incorporated, makes paragliders for sale through specialty sporting goods stores. The company has a andard paraglider model, but also makes custom-designed paragliders. Management has designed an activity-based osting system with the following activity cost pools and activity rates: Activity Cost Pool Supporting direct labor Order processing Activity Rate $20 per direct labor-hour $ 192 per order

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Subject :- Accounting 

Thermal Rising, Incorporated, 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
$ 192 per order
$ 256 per custom design
$426 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:
Number of gliders
Number of orders
Number of custom designs
Direct labor-hours per glider
Selling price per glider
Direct materials cost per glider
The company's direct labor rate is $22 per hour.
Standard
Model
10
2
0
30.50
$ 1,850
$ 478
Answer is complete but not entirely correct.
Customer margin
$ 898 X
Custom
Design
2
2
2
33.00
$ 2,430
$ 568
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.)
Transcribed Image Text:Thermal Rising, Incorporated, 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 $ 192 per order $ 256 per custom design $426 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: Number of gliders Number of orders Number of custom designs Direct labor-hours per glider Selling price per glider Direct materials cost per glider The company's direct labor rate is $22 per hour. Standard Model 10 2 0 30.50 $ 1,850 $ 478 Answer is complete but not entirely correct. Customer margin $ 898 X Custom Design 2 2 2 33.00 $ 2,430 $ 568 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.)
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