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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 ....................... $26 per direct labor-hour

Order processing ................................ $284 per order

Custom design processing ................. $186 per custom design

Customer service ............................... $379 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

20

3

Number of orders

1

3

Number of custom designs

0

3

Direct labor-hours per glider

26.35

28

Selling price per glider

$ 1850

$ 2400

Direct materials cost per glider

$ 564

$ 634

The companys direct labor rate is $19.50 per hour.

Required:

Using the companys activity-based costing system, compute the total customer margin.

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