Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Thermal Rising, Incorporated, 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, Incorporated, 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 $ 200 per order
Custom design processing $ 264 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 12 3
Number of orders 2 3
Number of custom designs 0 3
Direct labor-hours per glider 28.50 31.00
Selling price per glider $ 1,800 $ 2,450
Direct materials cost per glider $ 472 $ 578

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

Cost Accounting A Managerial Emphasis International

Authors: Charles T. Horngren, Srikant M. Datar, George Foster

11th Edition

8120323548, 978-8120323544

More Books

Students also viewed these Accounting questions

Question

=+a) Draw the decision tree.

Answered: 1 week ago

Question

Has each action got a clear and measurable outcome?

Answered: 1 week ago

Question

Have you eliminated jargon and unexplained acronyms?

Answered: 1 week ago