Reference no: EM132500916
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 $ 198 per order
Custom design processing $ 265 per custom design
Customer service $ 422 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 2
Number of orders 2 2
Number of custom designs 0 2
Direct labor-hours per glider 28.50 34.00
Selling price per glider $ 1,650 $ 2,360
Direct materials cost per glider $ 446 $ 580
- The company's direct labor rate is $20 per hour.
Question 1: What is the customer margin
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: What is the customer margin? Thermal Rising, Inc., makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider
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