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Exercise 7-5 (Static) Product and Customer Profitability Analysis [LO7-4, LO7-5] Thermal Rising. Incorporated, makes paragliders for sale through specialty sporting goods stores. The company has
Exercise 7-5 (Static) Product and Customer Profitability Analysis [LO7-4, LO7-5] 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 designed an activity-based costing system with the following activity cost pools and activity rates: Activity Cost Pool Activity Rate Supporting direct labor $ 26 per direct laborhour Order processing 3 284 per order Custom design processing 3 186 per custom design Customer service $ 379 per customer Management wants to calculate the profitability of a particular customer, Big Sky Outtters, which ordered the following products over the last 12 months: Standard Custom Model Design Number of gliders 20 3 Number of orders 1 3 Number of custom designs 0 3 Direct laborhours per glider 26.35 28.00 Selling price per glider $ 1,850 $ 2,400 Direct materials cost per glider $ 564 $ 634 The company's direct labor rate is $19.50 per hour. Required: Using the company's 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. Customer margin [
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