Reference no: EM132516803

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

Order processing $192 per order

Custom design processing $252 per custom design

Customer service $424 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                             3

Number of orders                                  1                           3

Number of custom designs                        0                        3

Direct labor-hours per glider                27.50                         32.00

Selling price per glider                       $1,725                         $2,380

Direct materials cost per glider                   $464                    $572

• The company's direct labor rate is $16 per hour.

Required:

Question 1: 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.)