**Thermal Rising, Incorporated: Activity-Based Costing and Customer Profitability Analysis**Thermal Rising, Incorporated, specializes in manufacturing paragliders for sale through specialty sporting goods stores. The company produces a standard paraglider model and also offers custom-designed paragliders. To manage costs efficiently, the company has implemented an activity-based costing system. The activity cost pools and activity rates are listed below:**Activity Cost Pool Rates:**- **Supporting Direct Labor:** $18 per direct labor-hour- **Order Processing:** $192 per order- **Custom Design Processing:** $259 per custom design- **Customer Service:** $426 per customer**Case Study: Big Sky Outfitters**The management team seeks to evaluate the profitability of Big Sky Outfitters, a customer who placed the following orders over the past 12 months:| | Standard Model | Custom Design ||-------------------------------------------|----------------|---------------|| Number of gliders | 11 | 2 || Number of orders | 2 | 2 || Number of custom designs | 0 | 2 || Direct labor-hours per glider | 29.50 | 34.00 || Selling price per glider | $1,925 | $2,480 || Direct materials cost per glider | $464 | $576 |The company’s direct labor rate is $22 per hour.**Analysis Requirements:**Using the company's activity-based costing system, compute the customer margin for Big Sky Outfitters. Ensure all intermediate calculations and the final answer are rounded to the nearest whole dollar amount. Loss amounts should be expressed with a minus sign.[The image includes a placeholder for "Customer margin," indicating the area where the calculated value should be entered.]

Direct material cost is the cost of raw material produced or purchased to produce the final…

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 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 Management wants to calculate the profitability of a particular customer, Big Sky Outfitters, which ordered the following products over the last 12 months: Number of gliders Number of orders Number of custom designs Direct labor-hours per glider Activity Rate $ 18 per direct labor-hour $ 192 per order $ 259 per custom design $426 per customer Selling price per glider Direct materials cost per glider The company's direct labor rate is $22 per hour. Customer margin Standard Model 11 2 0 29.50 $ 1,925 $ 464 Custom Design 2 2 2 34.00 $ 2,480 $ 576 Required: Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters. Note: Round your intermediate calculations and final answer to the nearest whole dollar amount. Loss amounts should be entered with a minus sign.

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 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 Management wants to calculate the profitability of a particular customer, Big Sky Outfitters, which ordered the following products over the last 12 months: Number of gliders Number of orders Number of custom designs Direct labor-hours per glider Activity Rate $ 18 per direct labor-hour $ 192 per order $ 259 per custom design $426 per customer Selling price per glider Direct materials cost per glider The company's direct labor rate is $22 per hour. Customer margin Standard Model 11 2 0 29.50 $ 1,925 $ 464 Custom Design 2 2 2 34.00 $ 2,480 $ 576 Required: Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters. Note: 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

Section: Chapter Questions

Problem 1Q

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