mg EXERCISE 5-5 Product and Customer Profitability Analysis 105-4, L05-5 Thermal Rising, Inc., makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider model, but also makes custom-designed paragliders. Manage- ment 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- fitters, which has ordered the following products over the last 12 months: Standard Model 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. 20 1 O 26.35 $1,850 $564 3 3 3 28.00 $2,400 $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