Question

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	$	198	per order
Custom design processing	$	266	per custom design
Customer service	$	430	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		15		2
Number of orders		2		2
Number of custom designs		0		2
Direct labor-hours per glider		27.50		33.00
Selling price per glider	$	1,625	$	2,380
Direct materials cost per glider	$	444	$	574

The company’s direct labor rate is $18 per hour.

Required:

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.)

Answer 1

	Standard	Custom	Big Sky Outfitters
Sales Revenue	24,375	4,760	29,135
Less: Costs
Direct Material	6,660	1,148	7,808
Direct labor	7,425	1,188	8,613
Overheads
Supporting Direct labor	8,250	1,320	9,570
Order Processing	396	396	792
Custom Design	-	532	532
Customer Service			430
Total cost			27,745
Customer Margin			1,390

А в с 1 Standard Custom Big Sky Outfitters 2 Sales Revenue =15*1625 =2*2380 =B2+C2 3 Less: Costs 4. Direct Material =15*444 =2*574 =B4+C4 5 Direct labor =15*27.5*18 =2*33*18 =B5+C5 6 Overheads 7 Supporting Direct labor =15*27.5*20 =2*33*20 =B7+07 8 Order Processing =198*2 =198*2 =B8+C8 9 Custom Design =266*2 =B9+C9 10 Customer Service 430 11 Total cost =SUM(D4:D10) 12 Customer Margin =D2-D11