Activity Cost Pool Supporting direct labour hour Activity Rates $26 per direct labour $379 per customer $284 per order $186 per custom Customer service Order processing Custom desigh processing design Management would like an analysis of the profitability of a particular customer, Eagle Wings, which has ordered the following products over the last 12 months: Standard Model Custom design No. of gliders 20 3 No of orders 1 3 No. of custom designs Direct labour hours per item Selling price per unit Direct material cost per glider 3 26.35 28.00 $1850 $2,400 $564 $634 The company's direct labour rate is $19.50 per hour. Required: Using the company's activity-based costing system, compute the customer margin of Thermal Rising

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Q- 9:
Thermal Rising, Inc., 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 labour
hour
Activity Rates
$26 per direct labour
Customer service
Order processing
Custom desigh processing
design
$379 per customer
$284 per order
$186 per custom
Management would like an analysis of the profitability of a
particular customer, Eagle Wings, which has ordered the
following products over the last 12 months:
Standard Model Custom design
No. of gliders
20
3
No of orders
1
3
No. of custom designs
Direct labour hours per item
Selling price per unit
Direct material cost per
3
26.35
28.00
$1850
$2,400
glider
$564
$634
The company's direct labour rate is $19.50 per hour.
Required: Using the company's activity-based costing system,
compute the customer margin of Thermal Rising
Transcribed Image Text:Q- 9: Thermal Rising, Inc., 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 labour hour Activity Rates $26 per direct labour Customer service Order processing Custom desigh processing design $379 per customer $284 per order $186 per custom Management would like an analysis of the profitability of a particular customer, Eagle Wings, which has ordered the following products over the last 12 months: Standard Model Custom design No. of gliders 20 3 No of orders 1 3 No. of custom designs Direct labour hours per item Selling price per unit Direct material cost per 3 26.35 28.00 $1850 $2,400 glider $564 $634 The company's direct labour rate is $19.50 per hour. Required: Using the company's activity-based costing system, compute the customer margin of Thermal Rising
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