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Thermal Rising, Inc., makes paragliders for sale through specialty sporting goods stores. The com - pany has a standard paraglider model, but also makes custom
Thermal Rising, Inc., makes paragliders for sale through specialty sporting goods stores. The com
pany has a standard paraglider model, but also makes customdesigned paragliders. Management has
designed an activitybased costing system with the following activity cost pools and activity rates:
Management would like an analysis of the profitability of a particular customer, Big Sky Outfitters,
which has ordered the following products over the last months:
The companys direct labor rate is $ per hour.
Activity Cost Pool Activity Rates
Supporting direct labor $ per direct laborhour
Machine processing $ per machinehour
Machine setups $ per setup
Production orders $ per order
Shipments $ per shipment
Product sustaining $ per product
Total Expected Activity
K M
Number of units produced per year
Direct laborhours
Machinehours
Machine setups
Production orders
Shipments
Product sustaining
Activity Cost Pool Activity Rate
Supporting direct labor $ per direct laborhour
Order processing $ per order
Custom design processing $ per custom design
Customer service $ per customer
Standard
Model
Custom
Design
Number of gliders
Number of orders
Number of custom designs
Direct laborhours per glider
Selling price per glider $ $
Direct materials cost per glider $ $
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