Question
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 $ 16 per direct labor-hour Order processing $ 184 per order Custom design processing $ 261 per custom design Customer service $ 424 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 10 3 Number of orders 2 3 Number of custo
m designs | 0 | 3 |
---|---|---|
Direct labor-hours per glider | 26.50 | 34.00 |
Selling price per glider | $ 1,950 | $ 2,480 |
Direct materials cost per glider | $ 482 | $ 568 |
The companys direct labor rate is $22 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.
Customer Margin:
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