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 Supporting direct labor Order processing Custom design processing Customer service Activity Rate $ 16 per direct labor-hour $ 194 per order $ 264 per custom design $ 418 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 Number of orders Number of custom designs Direct labor-hours per glider Selling price per glider Direct materials cost per glider Standard Custom Model Design 15 2 1 2. 0 29.50 33.00 $1,625 $2,380 $ 442 $ 566 The company's direct labor rate is $20 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.) Customer margin

Answer 1

A B с D Standard Custom 1 Model Design 2 Number of gliders 15 2 3 Direct labor hours per glider 29.5 33 4 Total Direct labor hours 443 66 5 Standard Custom Total 6 Model Design 7 Sales $ 24,375$ 4,760 $ 29,135 8 Less: 9 Direct material cost $ 6,630 $ 1,132 $ 7,762 10 Direct labor cost $ 8,850 $ 1,320 $ 10,170 11 Overhead: 12 Supporting direct labor $ 7,080 $ 1,056 $ 8,136 13 Order processing $ 194$ 388 $ 582 14 Custom design processing $ $ 528$ 528 15 Customer service $ 418 16 Customer Margin $ 1,539

А B с D 1 Standard Model Custom Design 2 Number of gliders 15 2 3 Direct labor hours per glider 29.5 33 4 Total Direct labor hours =+B2*B3 =+C2*C3 5 Standard Model Custom Design Total 6 =1625*15 =2380*2 =+B7+C7 -442*15 =566*2 =20*C4 =+B9+C9 =+B10+C10 =20*B4 7 Sales 8 Less: 9 Direct material cost 10 Direct labor cost 11 Overhead: 12 Supporting direct labor 13 Order processing 14 Custom design processing 15 Customer service 16 Customer Margin =16*B4 =+B12+C12 =194*1 =+C4*16 =194*2 =264*2 =+B13+C13 =186*0 =+B14+C14 418 |=+D7-SUM(09:D15)