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.) Answer is complete but not entirely correct. Customer margin $ 571 >
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.) Answer is complete but not entirely correct. Customer margin $ 571 >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Variance Analysis
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Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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![Exercise 7-5 (Algo) Product and Customer Profitability Analysis [LO7-4, LO7-5]
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
$ 188 per order
$ 267 per custom design
$ 428 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 $20 per hour.
Required:
Standard
Model
Custom Design
14
3
1
3
3
28.50
32.00
$ 1,825
$ 462
$ 2,410
$ 574
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.)
Answer is complete but not entirely correct.
Customer margin
$
571 X](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcd0db416-f9b4-427c-b1e9-15a3aceeead1%2Fc955234e-899f-4108-9a45-494b26c9c178%2Fdqd2wld_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 7-5 (Algo) Product and Customer Profitability Analysis [LO7-4, LO7-5]
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
$ 188 per order
$ 267 per custom design
$ 428 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 $20 per hour.
Required:
Standard
Model
Custom Design
14
3
1
3
3
28.50
32.00
$ 1,825
$ 462
$ 2,410
$ 574
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.)
Answer is complete but not entirely correct.
Customer margin
$
571 X
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