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. Management has designed an activity-based costing system with the following activity cost pools and activity rates: Activity Cost Pool Supporting direct labor Order processing Custom design processing Customer service Activity Rate $ 16 per direct labor-hour $ 184 per order $ 254 per custom design $ 426 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: 2 Number of gliders Number of orders Number of custom designs Direct labor-hours per glider Selling price per glider Direct materials cost per glider Standard Custom Model Design 16 2 1 0 2 26.50 34.00 $ 1,700 $ 2,350 $ 476 $ 572 The company's direct labor rate is $20 per hour. Required: Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters. (Round your intermediate calculations and final answer to the nearest whole dollar amount. Loss amounts should be entered with a minus sign.) Customer margin Fogerty Company makes two products-titanium Hubs and Sprockets. Data regarding the two products follow: Direct Labor- Hours per Annual Unit Production 0.90 19,eee units 2.52 42,880 units Hubs Sprockets Additional information about the company follows: a. Hubs require $24 in direct materials per unit, and Sprockets require $20. b. The direct labor wage rate is $18 per hour. c. Hubs require special equipment and are more complex to manufacture than Sprockets. d. The ABC system has the following activity cost pools: Activity Activity Cost Pool (Activity Measure) Machine setups (number of setups) Special processing machine-hours) General factory (organization-sustaining) Estimated Overhead Cost $ 16, 245 $220,000 $ 227,180 Hubs Sprockets Total 95 76 171 4,480 4,400 NA NA NA Required: 1. Compute the activity rate for each activity cost pool. 2 Determine the unit product cost of each product according to the ABC system. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the unit product cost of each product according to the ABC system. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Direct materials Direct labor Overhead Hubs 24.00 18.20 0.47 Sprockets S 20.00 9.00 Unit cost S 40.67 S 29.00
