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:

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 Supporting direct labor Order processing Custom design processing Customer service Activity Rate $ 20 per direct labor-hour $ 196 per order $ 258 per custom design $ 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 Custom Model Design 1 2 2 2 Number of gliders Number of orders Number of custom designs Direct labor-hours per glider Selling price per glider Direct materials cost per glider 28.50 33.00 $1,650 $2,330 $ 474 $ 584 The company's direct labor rate is $22 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

Revenue		24460	=(1650*12)+(2330*2)
Costs:
Direct materials	6856		=(474*12)+(584*2)
Direct labor	8976		=(28.5*22*12)+(33*22*2)
Supporting Direct labor	8160		=(28.5*20*12)+(33*20*2)
Order processing	588		=(1*196)+(2*196)
Custom design processing	516		=(2*258)
Customer service	430
Total costs		25526
Customer margin		-1066