sss Exercise 7-5 (Algo) Product and Customer Profitability Analysis [LO7-4, LO7-5]Thermal Rising, Incorporated, makes paragliders for sale through specialty sporting goods stores. The company has astandard paraglider model, but also makes custom-designed paragliders. Management has designed an activity-basedcosting system with the following activity cost pools and activity rates:Activity Cost PoolSupporting direct laborOrder processingCustom design processingCustomer serviceActivity Rate$ 20 per direct labor-hour$ 184 per order$ 260 per custom design$ 430 per customerManagement would like an analysis of the profitability of a particular customer, Big Sky Outfitters, which has ordered thefollowing products over the last 12 months:Number of glidersNumber of ordersNumber of custom designsStandardCustomModelDesign143130327.50Direct labor-hours per gliderSelling price per gliderDirect materials cost per gliderThe company's direct labor rate is $20 per hour.Required:$ 1,875$ 45032.00$ 2,460$ 570Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters. (Round yourintermediate calculations and final answer to the nearest whole dollar amount. Loss amounts should be entered with aminus sign.)Customer margin

Customer service reflects the profitability derived from serving a specific customer or client. It…

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.)

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.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

sss

Exercise 7-5 (Algo) Product and Customer Profitability Analysis [LO7-4, LO7-5]
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
$ 20 per direct labor-hour
$ 184 per order
$ 260 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
Standard
Custom
Model
Design
14
3
1
3
0
3
27.50
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:
$ 1,875
$ 450
32.00
$ 2,460
$ 570
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

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