Exercise 5-5 (Algo) Product and Customer Profitability Analysis [LO5-4, LO5-5]

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	Activity Rate
Supporting direct labor	$ 22	per direct labor-hour
Order processing	$ 188	per order
Custom design processing	$ 252	per custom design
Customer service	$ 416	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	13	2
Number of orders	1	2
Number of custom designs	0	2
Direct labor-hours per glider	30.50	31.00
Selling price per glider	$ 1,875	$ 2,490
Direct materials cost per glider	$ 478	$ 586

The companys direct labor rate is $22 per hour.

Required:

Using the companys 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.