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. 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 Activity Rate $ 18 per direct labor-hour $188 per order $ 269 per custom design $ 426 per customer Number of custom designs Direct labor-hours per glider Selling price per glider Direct materials cost per glider The company's direct labor rate is $22 per hour. Customer margin Standard Model 15 2 0 27.50 $ 1,925 $ 474 Custom Design 3 3 3 34.00 $ 2,490 $ 580 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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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
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
Direct labor-hours per glider
Activity Rate
$ 18 per direct labor-hour
$ 188 per order
$ 269 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
15
2
0
27.50
$ 1,925
$ 474
Custom
Design
3
3
3
34.00
$ 2,490
$ 580
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.)
Transcribed Image Text: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 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 Direct labor-hours per glider Activity Rate $ 18 per direct labor-hour $ 188 per order $ 269 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 15 2 0 27.50 $ 1,925 $ 474 Custom Design 3 3 3 34.00 $ 2,490 $ 580 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.)
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