Determine the total overhead cost that would be assigned to each of the products listed above in the tequired: activity-based costing system. EXERCISE 7-5 Product and Customer Profitability Analysis [LO7-4, L07-5) Thermal Rising, Inc., makes paragliders for sale through specialty sporting goods stores. The c pany 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: com- Activity Cost Pool Activity Rate Supporting direct labor . Order processing .... Custom design processing $26 per direct labor-hour $284 per order $186 per custom design $379 per customer Customer service Management would like an analysis of the profitability of a particular customer, Big Sky Oufit. ters, which has ordered the following products over the last 12 months: Standard Custom Model Design Number of gliders 20 3. Number of orders 1 Number of custom designs. 0. 28.00 $2,400 $634 Direct labor-hours per glider 26.35 Selling price per glider ... Direct materials cost per glider $1,850 $564 The company's direct labor rate is $19.50 per hour. Activity-Based Costing: A Tool to Aid Decision Making Required: Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters.
Determine the total overhead cost that would be assigned to each of the products listed above in the tequired: activity-based costing system. EXERCISE 7-5 Product and Customer Profitability Analysis [LO7-4, L07-5) Thermal Rising, Inc., makes paragliders for sale through specialty sporting goods stores. The c pany 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: com- Activity Cost Pool Activity Rate Supporting direct labor . Order processing .... Custom design processing $26 per direct labor-hour $284 per order $186 per custom design $379 per customer Customer service Management would like an analysis of the profitability of a particular customer, Big Sky Oufit. ters, which has ordered the following products over the last 12 months: Standard Custom Model Design Number of gliders 20 3. Number of orders 1 Number of custom designs. 0. 28.00 $2,400 $634 Direct labor-hours per glider 26.35 Selling price per glider ... Direct materials cost per glider $1,850 $564 The company's direct labor rate is $19.50 per hour. Activity-Based Costing: A Tool to Aid Decision Making Required: Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 5PA: Allocating selling and administrative expenses using activity-based costing Arctic Air Inc....
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Question
7-5
Transcribed Image Text:Determine the total overhead cost that would be assigned to each of the products listed above in the
tequired:
activity-based costing system.
EXERCISE 7-5 Product and Customer Profitability Analysis [LO7-4, L07-5)
Thermal Rising, Inc., makes paragliders for sale through specialty sporting goods stores. The c
pany 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:
com-
Activity Cost Pool
Activity Rate
Supporting direct labor .
Order processing ....
Custom design processing
$26 per direct labor-hour
$284 per order
$186 per custom design
$379 per customer
Customer service
Management would like an analysis of the profitability of a particular customer, Big Sky Oufit.
ters, which has ordered the following products over the last 12 months:
Standard
Custom
Model
Design
Number of gliders
20
3.
Number of orders
1
Number of custom designs.
0.
28.00
$2,400
$634
Direct labor-hours per glider
26.35
Selling price per glider ...
Direct materials cost per glider
$1,850
$564
The company's direct labor rate is $19.50 per hour.
Transcribed Image Text:Activity-Based Costing: A Tool to Aid Decision Making
Required:
Using the company's activity-based costing system, compute the customer margin of Big Sky
Outfitters.
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