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 $ 20 per direct labor-hour

Order processing $ 198 per order

Custom design processing $ 254 per custom design

Customer service $ 418 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:

Standard Model Custom Design

Number of gliders 14 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 $ 1,650 $ 2,360

Direct materials cost per glider $ 454 $ 582

The companys direct labor rate is $20 per hour.

Required: Using the companys 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.)

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

Contemporary Debates On Politics And Public Administration In The Postmodern Era

Authors: Ă–mer Ugur, Kadir Caner Dogan

1st Edition

3631796331, 9783631796337

More Books

Students also viewed these Accounting questions

Question

Explain all drawbacks of application procedure.

Answered: 1 week ago

Question

3 What are the aims of appraisal?

Answered: 1 week ago

Question

7 Compare and contrast evaluative and developmental appraisal.

Answered: 1 week ago