Exercise 5-5 (Algo) Product and Customer Profitability Analysis [LO5-4, LO5-5]
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 | $ | 16 | per direct labor-hour |
Order processing | $ | 184 | per order |
Custom design processing | $ | 256 | 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 | 13 | 3 | ||
Number of orders | 2 | 3 | ||
Number of custom designs | 0 | 3 | ||
Direct labor-hours per glider | 28.50 | 32.00 | ||
Selling price per glider | $ | 1,625 | $ | 2,360 |
Direct materials cost per glider | $ | 476 | $ | 576 |
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:
Revenue | 28205 | =(1625*13)+(2360*3) | |
Costs: | |||
Direct materials | 7916 | =(476*13)+(576*3) | |
Direct labor | 9330 | =(28.5*20*13)+(32*20*3) | |
Supporting Direct labor | 7464 | =(28.5*16*13)+(32*16*3) | |
Order processing | 920 | =(2*184)+(3*184) | |
Custom design processing | 768 | =(3*256) | |
Customer service | 430 | ||
Total costs | 26828 | ||
Customer margin | 1377 |
Exercise 5-5 (Algo) Product and Customer Profitability Analysis [LO5-4, LO5-5] Thermal Rising, Inc., makes paragliders for...
Exercise 5-5 (Algo) Product and Customer Profitability Analysis (LO5-4, LO5-5] 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 $ 192 per order $ 255 per custom design $...
Check Exercise 7-5 Product and Customer Profitability Analysis (L07-4, LO7-5) 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 rates: Activity Cost Pool Supporting direct labor Order processing Activity Rate $ 20 per direct labor-hour $ 202 per order $ 264 per custom design $ 428 per customer...
Exercise 7-5 Product and Customer Profitability Analysis [LO7-4, LO7-5] 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 Activity Rate $ 16 per direct labor-hour 186 per order 260 per custom design $ 426 per customer Customer service...
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 $ 16 per direct labor-hour Order processing $ 186 per order Custom design processing $ 268 per custom design Customer service $ 436 per customer Management would like an analysis of the...
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 $ 202 per order $ 255 per custom design $ 426 per customer Management would like an analysis of the...
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 $ 194 per order Custom design processing $ 262 per custom design Customer service $ 424 per customer Management would like an analysis of the...
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 $ 16 per direct labor-hour Order processing $ 182 per order Custom design processing $ 264 per custom design Customer service $ 424 per customer Management would like an analysis of the...
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...
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 $ 254 per custom design Customer service $ 418 per customer Management would like an analysis of the...
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 $ 194 per order Custom design processing $ 264 per custom design Customer service $ 422 per customer Management would like an analysis of the...