Reference no: EM132507015
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 $ 20 per direct labor-hour
Order processing $ 194 per order Custom design processing $ 253 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 11 2
Number of orders 1 2
Number of custom designs 0 2
Direct labor-hours per glider 30.50 32.00
Selling price per glider $ 1,700 $ 2,330
Direct materials cost per glider $ 468 $ 586
The company's direct labor rate is $22 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.)
Question 2: Find the Customer Margin
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