Thermal Rising, Incorporated, makes paragliders for sale through specialty sporting goods stores. The company has a standardparaglider model, but also makes custom-designed paragliders. Management designed an activity-based costing system with thefollowing activity cost pools and activity rates:Activity Cost PoolSupporting direct laborOrder processingCustom design processingCustomer serviceActivity Rate$20 per direct labor-hour$ 192 per order$ 265 per custom design$ 432 per customerManagement wants to calculate the profitability of a particular customer, Big Sky Outfitters, which ordered the following products overthe last 12 months:StandardModelCustom DesignNumber of glidersNumber of ordersNumber of custom designsDirect labor-hours per gliderSelling price per gliderDirect materials cost per gliderThe company's direct labor rate is $18 per hour.Required:1520028.50$ 1,850$ 470222034.00$ 2,480$ 572Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters.Note: Round your intermediate calculations and final answer to the nearest whole dollar amount. Loss amounts should be enteredwith a minus sign.

Step 1:Step 2:Using Activity-based costing Supporting direct labor cost=Total Direct labor hours x…

Answered: Thermal Rising, Incorporated, makes…

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 designed an activity - based costing system with the following activity cost pools and activity rates: Activity Cost Pool Activity Rate Supporting direct labor $ 22 per direct labor-hour Order processing $ 198 per order Custom design processing $ 252 per custom design Customer service $ 428 per customer Management wants to calculate the profitability of a particular customer, Big Sky Outfitters, which ordered the following products over the last 12 months: Standard Model Custom Design Number of gliders 11 2 Number of orders 22 Number of custom designs 02 Direct labor-hours per glider 27.50 32.00 Selling price per glider $1,825 $2,490 Direct materials cost per glider $ 452 $ 570 The company's direct labor rate is $16 per hour. what is the customer margin?
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 $18 per direct labor-hour $ 192 per order $ 256 per custom design $432 per customer Selling price per glider Direct materials cost per glider The company's direct labor rate is $22 per hour. Customer margin Standard Model 12 2 0 28.50 $ 1,800 $456 Custom Design 3 3 3 32.00 $ 2,480 $ 576 Required: Using the company's…
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 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 $ 200 per order $ 257 per custom design $ 426 per customer Management wants to calculate the profitability of a particular customer, Big Sky Outfitters, which 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 Standard Custom Model Design 16 2 2 2 0 2 27.50 33.00 $ 1,900 $ 456 $ 2,440 $ 574 The company's direct labor rate is $20 per hour. Required: Using the company's activity-based costing system,…
Roll Board Inc. manufactures several models of high-quality skateboards. The company’s ABC system has four activity cost pools, which are listed below along with their activity measures and activity rates: Activity Cost Pool Activity Measure Activity Rate Supporting direct labour Number of direct labour-hours $ 4 per direct labour-hour Batch processing Number of batches $ 37 per batch Order processing Number of orders $ 83 per order Customer service Number of customers $ 52 per customer The company just completed a single order from SkateCo for 1,650 entry-level skateboards. The order was produced in 31 batches. Each skateboard required 0.6 direct labour-hours. The selling price was $125 per skateboard, the direct materials cost was $69.40 per skateboard, and the direct labour cost was $18.30 per direct labour-hour. This was the only order from SkateCo for the year. Required: Prepare a report showing the customer margin on sales to SkateCo for the year.
Metroid Electric manufactures power distribution equipment for commercial customers, such as hospitals and manufacturers. Activity-based costing was used to determine customer profitability. Customer service activities were assigned to individual customers, using the following assumed customer service activities, activity base, and activity rate: Customer Service Activity Activity Base Activity Rate Bid preparation Number of bid requests $420 per request Shipment Number of shipments $90 per shipment Support standard items Number of standard items ordered $30 per std. item Support nonstandard items Number of nonstandard items ordered $180 per nonstd. item Assume that the company had the following gross profit information for three representative customers: Customer 1 Customer 2 Customer 3 Revenues $130,000 $210,000 $180,000 Cost of goods sold (81,900) (113,400) (90,000) Gross profit $48,100 $96,600 $90,000 Gross profit…
Management would like an analysis of the profitability of a particular customer, Cell City, which has ordered the following products over the last 12 months: Number of cases Number of orders. Direct labour-hours per case Selling price per case. Direct materials cost per case Sales Costs: Direct materials Direct labour Supporting manufacturing Order processing Customer service The company's direct labour rate is $30 per hour. Required: Using the company's ABC system, compute the customer margin of Cell City. Customer margin Standard Model 290 5 0.25 $49 $ 26 70 Deluxe Model 105 2 $ 0.40 $ 69 $29 70 (70)
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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 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 wants to calculate the profitability of a particular customer, Big Sky Outfitters, which ordered the following products over the last 12 months: Number of gliders Number of orders Number of custom designs Activity Rate $20 per direct labor-hour $186 per order. $257 per custom design $ 428 per customer Standard Model Direct labor-hours per glider Selling price per glider Direct materials cost per glider The company's direct labor rate is $20 per hour. Customer margin 12 1 0 27.50 $ 1,825 $ 458 Custom Design 3 3 3 32.00 $ 2,440 $ 566 Required: Using the company's activity-based…
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 $ 16 per direct labor-hour $ 200 per order $ 258 per custom design $ 430 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 2 3 0 29.50 3 33.00 $ 2,410 $ 580 $ 1,800 $ 448 Using the company's activity-based…

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