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Thermal Rising, Inc., makes paragliders for sale through specialty sporting goods stores. The company has...

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Accounting

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 Supporting direct labor $ 16 per direct labor-hour Order processing $ 200 per order Custom design processing $ 257 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 14 2 Number of orders 2 2 Number of custom designs 0 2 Direct labor-hours per glider 28.50 32.00 Selling price per glider $ 1,700 $ 2,370 Direct materials cost per glider $ 480 $ 568 The companys direct labor rate is $18 per hour.

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

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