EXERCISE 7-5 Product and Customer Profitability Analysis (L07-4, LO7-5) Thermal Rising, Inc., makes paragliders for sale through specialty sporting goods stores. The com- pany 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 ....... Order processing .......... Custom design processing. Customer service $26 per direct labor-hour $284 per order $186 per custom design $379 per customer Management would like an analysis of the profitability of a particular customer. Big Sky Out ters, which has ordered the following products over the last 12 months Standard Model 20 Custom Design Number of gliders ........ Number of orders ........... Number of custom designs. Direct labor-hours per glider ... Selling price per glider Direct materials cost per glider O 28.00 26.35 $1.850 $564 $2,400 $634 The company's direct labor rate is $19,50 per hour