Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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 Activity Rate

Supporting direct labor $ 16 per direct labor-hour

Order processing $ 194 per order

Custom design processing $ 261 per custom design

Customer service $ 432 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:

StandardModel CustomDesign

Number of gliders 15 2

Number of orders 2 2

Number of custom designs 0 2

Direct labor-hours per glider 27.50 33.00

Selling price per glider $ 1,625 $ 2,370

Direct materials cost per glider $ 450 $ 578

The company's direct labor rate is $18 per hour.

Required:

Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters. (Do not round intermediate calculations. Round your final answer to the nearest dollar.)

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_2

Step: 3

blur-text-image_3

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

Management Accounting Information for creating and managing value

Authors: Kim Langfield Smith, David Smith, Paul Andon, Ronald Hilton, Helen Thorne

8th edition

9781760420413 , 978-1760420406

More Books

Students also viewed these Accounting questions

Question

Get married, do not wait for me

Answered: 1 week ago

Question

Do not pay him, wait until I come

Answered: 1 week ago

Question

Do not get married, wait until I come, etc.

Answered: 1 week ago