Question
Updraft Systems, Inc., makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider model, but also makes custom-designed paragliders. Management
Updraft Systems, 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 $ 18 per direct labor-hour Order processing $ 184 per order Custom designing $ 262 per custom design Customer service $ 434 per customer Management would like an analysis of the profitability of a particular customer, Eagle Wings, which has ordered the following products over the last 12 months: Standard Model Custom Design Number of gliders 10 2 Number of orders 1 2 Number of custom designs 0 2 Direct labor-hours per glider 26.50 34.00 Selling price per glider $ 1,675 $ 2,350 Direct materials cost per glider $ 468 $ 580 The companys direct labor rate is $20 per hour. Required: Using the companys activity-based costing system, compute the customer margin of Eagle Wings. (Do not round intermediate calculations.)
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