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:

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:

The companys direct labor rate is $18 per hour.

Required:

Using the companys activity-based costing system, compute the customer margin of Big Sky Outfitters.

Activity Cost Pool Supporting direct labor Order processing Custom designing processing$253 per custom design Customer service Activity Rate $ 20 per direct labor-hour $ 184 per order $432 per customer Customer margin