FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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
Number of gliders
Number of orders
Number of custom designs
Direct labor-hours per glider
$ 22
$ 188
Activity Rate
per direct labor-hour
per order
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:
$ 269 per custom design
$ 434 per customer
Customer margin
Selling price per glider
Direct materials cost per glider
The company's direct labor rate is $20 per hour.
Standard
Model
13
1
0
27.50
$ 1,925
$ 464
Custom
Design
3
3
34.00
$ 2,450
$ 580
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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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 Number of gliders Number of orders Number of custom designs Direct labor-hours per glider $ 22 $ 188 Activity Rate per direct labor-hour per order 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: $ 269 per custom design $ 434 per customer Customer margin Selling price per glider Direct materials cost per glider The company's direct labor rate is $20 per hour. Standard Model 13 1 0 27.50 $ 1,925 $ 464 Custom Design 3 3 34.00 $ 2,450 $ 580 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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