Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Joy Outfitters, Inc., makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider model, but also makes custom-designed paragliders. Management

Joy Outfitters, Inc., 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 $ 186 per order
Custom design processing $ 256 per custom design
Customer service $ 434 per customer

Management would like an analysis of the profitability of a particular customer, Yukko Inc., which has ordered the following products over the last 12 months:

Standard Model Custom Design
Number of gliders 15 2
Number of orders 2 2
Number of custom designs 0 2
Direct labor-hours per glider 29.50 33.00
Selling price per glider $ 1,650 $ 2,340
Direct materials cost per glider $ 450 $ 568

The companys direct labor rate is $18 per hour.

Required:

Using the companys activity-based costing system, compute the customer margin of Yukko Inc. (Round your intermediate calculations and final answer to the nearest whole dollar amount. Loss amounts should be entered with a minus sign.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Internal Auditing Handbook

Authors: K. H. Spencer Pickett

3rd Edition

0470518715, 978-0470518717

More Books

Students also viewed these Accounting questions