Thermal Rising, Incorporated, makes paragliders for sale through specialty sporting goods stores. The company has...
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Accounting
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
$ 18
per direct labor-hour
Order processing
$ 196
per order
Custom design processing
$ 253
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
12
2
Number of orders
1
2
Number of custom designs
0
2
Direct labor-hours per glider
29.50
32.00
Selling price per glider
$ 1,925
$ 2,400
Direct materials cost per glider
$ 446
$ 566
The companys direct labor rate is $20 per hour.
Required:
Using the companys activity-based costing system, compute the customer margin of Big Sky Outfitters.
Note: Round your intermediate calculations and final answer to the nearest whole dollar amount. Loss amounts should be entered with a minus sign.
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