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Exercise 7-5 Product and Customer Profitability Analysis [LO7-4, LO7-5] 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 labor Order processing Custom design processing Customer service. Activity Rate $ 22 per direct labor-hour $190 per order. Number of gliders Number of orders Number of custom designs $ 262 per custom design $ 436 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: Direct labor-hours per glider Selling price per glider Direct materials cost per glider Standard Custom Model Design 11 1 0 3 3 3 34.00 27.50 $1,725 $2,350 $ 478 $ 574 The company's direct labor rate is $22 per hour.

Exercise 7-5 Product and Customer Profitability Analysis [LO7-4, LO7-5] 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 labor Order processing Custom design processing Customer service. Activity Rate $ 22 per direct labor-hour $190 per order. Number of gliders Number of orders Number of custom designs $ 262 per custom design $ 436 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: Direct labor-hours per glider Selling price per glider Direct materials cost per glider Standard Custom Model Design 11 1 0 3 3 3 34.00 27.50 $1,725 $2,350 $ 478 $ 574 The company's direct labor rate is $22 per hour.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.) Customer margin
Transcribed Image Text: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.) Customer margin
Exercise 7-5 Product and Customer Profitability Analysis [LO7-4, LO7-5] 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 labor Order processing Custom design processing Customer service. Activity Rate $ 22 per direct labor-hour $190 per order. Number of gliders Number of orders Number of custom designs $ 262 per custom design $ 436 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: Direct labor-hours per glider Selling price per glider Direct materials cost per glider Standard Custom Model Design 11 1 0 3 3 3 34.00 27.50 $1,725 $2,350 $ 478 $ 574 The company's direct labor rate is $22 per hour.
Transcribed Image Text:Exercise 7-5 Product and Customer Profitability Analysis [LO7-4, LO7-5] 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 labor Order processing Custom design processing Customer service. Activity Rate $ 22 per direct labor-hour $190 per order. Number of gliders Number of orders Number of custom designs $ 262 per custom design $ 436 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: Direct labor-hours per glider Selling price per glider Direct materials cost per glider Standard Custom Model Design 11 1 0 3 3 3 34.00 27.50 $1,725 $2,350 $ 478 $ 574 The company's direct labor rate is $22 per hour.
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