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 umber of orders aber of custom designs Direct labor-hours per glider Activity Rate $ 22 per direct laboe-hour $190 per order $ 252 per custom design $ 436 per customer Standard Model Selling price per glider Direct materials cost per glider The company's direct labor rate is $22 per hour. Customer margn 13 2 0 27.50 $1,050 $450 Custom Design 34.00 $2,400 $ 586 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 doller emount. 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 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 umber of orders aber of custom designs Direct labor-hours per glider Activity Rate $ 22 per direct laboe-hour $190 per order $ 252 per custom design $ 436 per customer Standard Model Selling price per glider Direct materials cost per glider The company's direct labor rate is $22 per hour. Customer margn 13 2 0 27.50 $1,050 $450 Custom Design 34.00 $2,400 $ 586 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 doller emount. Loss amounts should be entered with a minus sign.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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
Activity Rate
$22 per direct labor-hour
$190 per order
$ 252 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:
Number of gliders
Hueber of orders
Thumber 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.
Standard
Model
13
2
0
27.50
$1,050
$450
Custom Design
2
34.00
$ 2,400
$ 586
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
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