Solution-Compute the customer margin of big sky outfitters

Compute the customer margin of big sky outfitters

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Reference no: EM131726461

Question - Thermal Rising, Inc., makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglidar 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	$20 per direct labor-hour
Order processing	$186 per order
Custom design processing	$266 per custom design
Customer service	$432 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	28.50	31.00
Selling price per glider	$1,675	$2,310
Direct materials cost per glider	$470	$582

The company's direct labor rate is $22 per hour.

Required -

Using the company's activity-based system, compute the customer margin of Big Sky Outfitters.

Reference no: EM131726461

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Compute the customer margin of big sky outfitters

Reference no: EM131726461

Reference no: EM131726461

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