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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 $ 186 per order
Custom designing processing $ 264 per custom design
Customer service $ 430 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 29.50 31.00
Selling price per glider $ 1,625 $ 2,310
Direct materials cost per glider $ 476 $ 582

The company

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