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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F117dd759-926b-455c-8e67-9aa5670a6b47%2Fd3614828-140a-476d-af16-8d86aad7ca1c%2F3ubh78h_processed.png&w=3840&q=75)
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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