jnelso67
Mar 23, 2011, 10:38 AM
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 $198 per order
Custom designing processing $266 per custom design
Customer service $422 per customer
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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 12 3
Number of orders 1 3
Number of custom designs 0 3
Direct labor-hours per glider 27.5 31
Selling price per glider $1,600 $2,390
Direct materials cost per glider $480 $582
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The company's direct labor rate is $18 per hour.
Required:
Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters. (Negative amount should be indicated by a minus sign. Omit the "$" sign in your response.)
Activity Cost Pool Activity Rate
Supporting direct labor $18 per direct labor-hour
Order processing $198 per order
Custom designing processing $266 per custom design
Customer service $422 per customer
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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 12 3
Number of orders 1 3
Number of custom designs 0 3
Direct labor-hours per glider 27.5 31
Selling price per glider $1,600 $2,390
Direct materials cost per glider $480 $582
--------------------------------------------------------------------------------
The company's direct labor rate is $18 per hour.
Required:
Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters. (Negative amount should be indicated by a minus sign. Omit the "$" sign in your response.)