Reference no: EM132507917
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 $18 per direct labor-hour
Order processing $194 per order
Custom design processing $252 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 3
Number of orders 1 3
Number of custom designs 0 3
Direct labor-hours per glider 30.50 32.00
Selling price per glider $1,750 $2,310
Direct materials cost per glider $446 $586
- The company's direct labor rate is $20 per hour.
Required:
Question1 : Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters. (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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