Reference no: EM13596686

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 -$26 per direct labor hour
• Order Processing- $284 per order
• Custom design processsing- $186 per custom design
• Customer Service- $379 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:

• Number of gliders 20(standard) 3(custom)
• Number of orders 1(standard) 3(custom)
• number of custom designs 0(standard) 3(custom)
• Direct labor-hours per glider 26.35(standard) 28(custom)
• selling price per glider $1,850(standard) $2,400(custom)
• Direct materials cost per glider $564(standard) $634(custom)

The company's direct labor rate is $19.50 per hour.
Required: Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters.