Nbspmanagement would like an analysis of the profitability

Reference no: EM13484602

Updraft Systems, 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	$	182	per order
Custom designing	$	251	per custom design
Customer service	$	422	per customer

Management would like an analysis of the profitability of a particular customer, Eagle Wings, which has ordered the following products over the last 12 months:

	Standard Model		Custom Design
Number of gliders		14		2
Number of orders		2		2
Number of custom designs		0		2
Direct labor-hours per glider		29.50		33
Selling price per glider	$	1,650	$	2,330
Direct materials cost per glider	$	448	$	566

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

Required:

Using the company's activity-based costing system, compute the customer margin of Eagle Wings.

Reference no: EM13484602

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