2 Exercise 7-5 Product and Customer Profitability Analysis [LO7-4, LO7-5] Thermal Rising, Inc., makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider activity cost pools and activity rates: 02:05.20model, but also makes custom-designed paragliders. Management has designed an activity-based costing system with the following Activity Cost Pool Supporting direct labor Order processing Custom design processing Customer service Activity Rate $ 18 per direct labor-hour 192 per order 270 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: Standard Custom Model Design Number of qliders Number of orders Number of custom designs Direct labor-hours per glider Selling price per glider Direct materials cost per glider 12 28.50 32.00 1,700 $2,330 $ 462 572 The company's direct labor rate is $16 per hour Requirec 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.) margin 3 Exercise 7-3 Compute Activity Rates [LO7-3) Green Thumb Gardening is a small gardening service that uses activity-based costing to estimate costs for pricing and other purposes. 02:05:10The proprietor of the company believes that costs are driven primarily by the size of customer lawns, the size of customer garden beds, the distance to travel to customers, and the number of customers. In addition, the costs of maintaining garden beds depends on whether the beds are low maintenance beds (mainly ordinary trees and shrubs) or high maintenance beds (mainly flowers and exotic plants). Accordingly, the company uses the five activity cost pools listed below Activity Cost Pool Caring for lawn Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs Customer billing and service Activity Measure Square feet of lawn Square feet of low maintenance beds Square feet of high maintenance beds Miles Number of customers The company already has completed its first stage allocations of costs and has summarized its annual costs and activity as follows: Estimated Overhead Activity Cost Pool Caring for lawn Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs Customer billing and service Cost 78,600 170,000 square feet of lawn 31,200 26,000 square feet of low maintenance beds 56,400 20,000 square feet of high maintenance beds Expected Activity $ 5,000 17, 000 miles 10,300 36 customers Requirec Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places.) Cost Pool Activity Rate Caring for lawn Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs Customer billing and service per square ft of lawn per square ft of low maintenance beds per square ft of high maintenance beds per mile per customer 4 Exercise 7-4 Second-Stage Allocation [LO7-4) Klumper Corporation is a diversified manufacturer of industrial goods. The company's activity-based costing system contains the 02:05:02following six activity cost pools and activity rates: Activity Cost Pool Supporting direct labor Machine processing Machine setups Production orders Shipments Product sustaining Activity Rates $9 per direct labor-hour $ 3 per machine-hour $ 50 per setup 150 per order 115 per shipment 775 per product Activity data have been supplied for the following two products: Total Expected Activit K425 N67 2,000 40 30 Number of units produced per year Direet labor-hours Machine-hours Machine setups 200 1,025 3,000 Production orders Shipments Product sustaining 10 Required How much total overhead cost would be assigned to K425 and M67 using the activity-based costing system? Cost Pool K425 M67 Supporting direct labor Machine processing Machine setups Production orders Shipments Product sustaining Total overhead cost