Question

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 per direct labor- $ 18hour $ 182 per order Supporting direct labor Order processing Custom designing processing Customer service $258 per custom °° design $430 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: Number of gliders Number of orders Number of custom designs Direct labor-hours per glider Standard Custom Model Design 15 2 2 2 02 28.50 32.00 $1,700 $2,390 Selling price per glider Direct materials cost per glider $ 470 $ 582 The company's direct labor rate is $18 per hour. Required: Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters. (Do not round intermediate calculations.) Customer margin

Answer 1

Sales	(1700*15)+(2390*2)		$            30,280.00
Costs:
Direct materials	(470*15)+(582*2)	$                                       8,214.00
Direct labor	(18*15*28.5)+(18*32*2)	$                                       8,847.00
Supporting direct labor	(15*28.5*18)+(2*32*18)	$                                       8,847.00
Order processing	(2+2)*182	$                                          728.00
Custom designing	(0+2)*258	$                                          516.00
Customer service		$                                          430.00	$            27,582.00
Customer margin			$              2,698.00