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 $ 20 per direct labor-hour $ 188 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: 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 10 2 2 2 28.50 32.00 $ 1,600 $2,370 $ 452 $ 584 The company's direct labor rate is $16 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 $ (8,238)

Answer 1

Solution:

Customer margin

$978

Big sky outfitters
Customer margin activity based costing
Sales		20740
Costs
Direct materials	5688
Direct labour	5584
Supporting direct labour	6980
Order processing	564
Custom design processing	516
Customer service	430	19762
Customer margin		978

9 _ Copy of HomeworkLib2 - Microsoft Excel (Product Activation Failed) X File Home Insert Page Layout Formulas Data Review View X % Cut AutoSum Calibri 11 A A z Wrap Text General Normal Bad Good La Copy Fill Paste B 1 U- - Merge & Center GP, % Calculation Conditional Format as Neutral Formatting Table Check Cell Insert Delete Format Format Painter Clear Sort & Find & Filter - Select Editing Font Alignment Number Styles Cells Clipboard G35 fac A B С D E F G H 1 J K L M N O P Q 19 20 21 Big sky outfitters Customer margin activity based costing Activity cost pool Supporting direct labour Order processing Custom design processing Customer service Activity rate 20 per direct labour hour 188 per order 258 per custom design 430 per customer 22 23 24 25 26 Sales 20740 Costs Direct materials Direct labour 5688 5584 Standard model Custom design Number of gliders 10 Number of orders 1 Number of custom designs 0 Direct labour hours per glider 28.5 Selling price per glider 1,600 Direct materials cost per glider 452 Supporting direct labour Order processing Custom design processing Customer service Customer margin 6980 564 516 430 2 2 2 32 2,370 584 19762 978 company direct labour hour 16 per hour 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 Sheet159 Sheet160 Sheet161 Sheet162 Sheet163 Sheet164 Sheet165 Sheet166 Sheet167 Sheet168 Sheet169 i Ready ON 100% 1 Type here to search O חד 15% [, 1) ENG 05:05 20-09-2020

_ Copy of HomeworkLib2 - Microsoft Excel (Product Activation Failed) х File Home Insert Page Layout Formulas Data Review View X * Cut AutoSum - Calibri 11 A A z Wrap Text General Normal Bad Good Ea Copy Fill Paste B 1 U- A, *Merge & Center GP, % Calculation Conditional Format as Neutral Formatting Table Check Cell Insert Delete Format Format Painter 2 Clear Sort & Find & Filter - Select Editing Clipboard Font Alignment Number Styles Cells G42 fac A В с D E F G H 1 19 20 21 Activity rate per direct labour hour Big sky outfitters Customer margin activity based costing 20 22 23 Activity cost pool Supporting direct labour Order processing Custom design processing Customer service per order Sales =(C32*C28)+(D32*D2 188 258 430 24 25 Costs per custom design per customer Direct materials Direct labour =(C33*C28)+(D33*D28) =ROUND((C35*C31*C28)+(C35*D31*D28),0) 26 Standard model Number of gliders 10 Number of orders 1 Number of custom designs 0 Direct labour hours per glider 28.5 Selling price per glider 1600 Direct materials cost per glider 452 Custom design 2 2 2 32 2370 584 Supporting direct labour =(C22*C31*C28)+(C22*D31*D28) Order processing =(C29+D29)*C23 Custom design processing =(C30+D30)*C24 Customer service =C25 Customer margin =SUM(H25:H30) =123-130 company direct labour hour 16 per hour 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 Sheet159 Sheet160 Sheet161 Sheet162 Sheet163 Sheet164 Sheet165 Sheet166 Sheet167 Sheet168 Sheet169 Ready OH 100% 1 Type here to search O TT 15% [, » ENG 05:06 20-09-2020