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 Activity Rate Supporting direct labor $ 20 per direct labor-hour Order processing $ 200 per order Custom design processing $ 258 per custom design Customer service $ 424 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:     Standard Model Custom Design Number of gliders   15   3 Number of orders   2   3 Number of custom designs   0   3 Direct labor-hours per glider   29.50   31.00 Selling price per glider $ 1,700 $ 2,370 Direct materials cost per glider $ 444 $ 576     The company’s direct labor rate is $18 per hour.   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.)

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Chapter1: Financial Statements And Business Decisions
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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 Activity Rate
Supporting direct labor $ 20 per direct labor-hour
Order processing $ 200 per order
Custom design processing $ 258 per custom design
Customer service $ 424 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:

 

  Standard
Model
Custom
Design
Number of gliders   15   3
Number of orders   2   3
Number of custom designs   0   3
Direct labor-hours per glider   29.50   31.00
Selling price per glider $ 1,700 $ 2,370
Direct materials cost per glider $ 444 $ 576
 

 

The company’s direct labor rate is $18 per hour.

 

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.)

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