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

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Accounting

Thermal Rising, Inc., makes paragliders for sale throughspecialty sporting goods stores. The company has a standardparaglider model, but also makes custom-designed paragliders.Management has designed an activity-based costing system with thefollowing activity cost pools and activity rates:
Activity Cost Pool Activity Rate
Supporting direct labor $ 22 per direct labor-hour
Order processing $ 190 per order
Custom design processing $ 267 per custom design
Customer service $ 428 per customer
Management would like an analysis of the profitability of aparticular customer, Big Sky Outfitters, which has ordered thefollowing products over the last 12 months:
Standard
Model Custom
Design
Number of gliders 16 2
Number of orders 1 2
Number of custom designs 0 2
Direct labor-hours per glider 28.50 33.00
Selling price per glider $ 1,625 $ 2,340
Direct materials cost per glider $ 468 $ 584
The company’s direct labor rate is $16 per hour.
Required:
Using the company’s activity-based costing system, compute thecustomer margin of Big Sky Outfitters. (Round yourintermediate calculations and final answer to the nearest wholedollar amount. Loss amounts should be entered with a minussign.)

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In: AccountingThermal Rising, Inc., makes paragliders for sale throughspecialty sporting goods stores. The company has a...Thermal Rising, Inc., makes paragliders for sale throughspecialty sporting goods stores. The company has a standardparaglider model, but also makes custom-designed paragliders.Management has designed an activity-based costing system with thefollowing activity cost pools and activity rates:Activity Cost PoolActivity RateSupporting direct labor$22per direct labor-hourOrder processing$190per orderCustom design processing$267per custom designCustomer service$428per customerManagement would like an analysis of the profitability of aparticular customer, Big Sky Outfitters, which has ordered thefollowing products over the last 12 months:StandardModelCustomDesignNumber of gliders162Number of orders12Number of custom designs02Direct labor-hours per glider28.5033.00Selling price per glider$1,625$2,340Direct materials cost per glider$468$584The company’s direct labor rate is $16 per hour.Required:Using the company’s activity-based costing system, compute thecustomer margin of Big Sky Outfitters. (Round yourintermediate calculations and final answer to the nearest wholedollar amount. Loss amounts should be entered with a minussign.)

Activity Cost Pool	Activity Rate
Supporting direct labor	$	22	per direct labor-hour
Order processing	$	190	per order
Custom design processing	$	267	per custom design
Customer service	$	428	per customer

	Standard Model		Custom Design
Number of gliders		16		2
Number of orders		1		2
Number of custom designs		0		2
Direct labor-hours per glider		28.50		33.00
Selling price per glider	$	1,625	$	2,340
Direct materials cost per glider	$	468	$	584