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 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 Activity Rate $26 per direct labor-hour $284 per order $186 per custom design $379 per customer Selling price per glider Direct materials cost per glider The company's direct labor rate is $19.50 per hour. Customer margin Standard Model 20 1 0 26.35 $ 1,850 $ 564 Custom Design 3 3 3 28.00 $ 2,400 $634 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.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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
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
Activity Rate
$26 per direct labor-hour
$ 284 per order
$ 186 per custom design
$379 per customer
Selling price per glider
Direct materials cost per glider
The company's direct labor rate is $19.50 per hour.
Customer margin
Standard
Model
20
1
0
26.35
1,850
$ 564
Custom
Design
333
28.00
$ 2,400
$634
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.)
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 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 Activity Rate $26 per direct labor-hour $ 284 per order $ 186 per custom design $379 per customer Selling price per glider Direct materials cost per glider The company's direct labor rate is $19.50 per hour. Customer margin Standard Model 20 1 0 26.35 1,850 $ 564 Custom Design 333 28.00 $ 2,400 $634 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.)
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