Thermal Rising, incorporated, makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider model, but also makes custom-designed paragliders. Management 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 Management wants to calculate the profitability of a particular customer. Big Sky Outfitters, which ordered the following products over the last 12 months: Number of gliders Number of orders Number of custom designs Direct labor-hours per glider Activity Rate $22 per direct labor-hour $198 per order $262 per custom design $424 per customer Selling price per glider Direct materials cost per glider The company's direct labor rate is $22 per hour. Customer margin Standard Model 18 28.50 $1.875 $456 Custom Design 32.28 2,430 Required: Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters Note: Round your Intermediate calculations and finel answer to the nearest whole dollar amount. Loss amounts should be entered with a minus sign.
Thermal Rising, incorporated, makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider model, but also makes custom-designed paragliders. Management 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 Management wants to calculate the profitability of a particular customer. Big Sky Outfitters, which ordered the following products over the last 12 months: Number of gliders Number of orders Number of custom designs Direct labor-hours per glider Activity Rate $22 per direct labor-hour $198 per order $262 per custom design $424 per customer Selling price per glider Direct materials cost per glider The company's direct labor rate is $22 per hour. Customer margin Standard Model 18 28.50 $1.875 $456 Custom Design 32.28 2,430 Required: Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters Note: Round your Intermediate calculations and finel answer to the nearest whole dollar amount. Loss amounts should be entered with a minus sign.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter4: Activity-based Costing
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Problem 8CE: Electan Company produces two types of printers. The company uses ABC, and all activity drivers are...
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![Thermal Rising, Incorporated, makes paragliders for sale through specialty sporting goods stores. The company has a standard
paraglider model, but also makes custom-designed paragliders. Management 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
Management wants to calculate the profitability of a particular customer, Big Sky Outfitters, which 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
Activity Rate
$ 22 per direct labor-hour
$ 198 per order
262 per custom design
424 per customer
The company's direct labor rate is $22 per hour.
Customer margin
Standard
Model
875
456
Custom Des
32-28
$7589
Required:
Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters
Note: Round your Intermediate calculations and finel answer to the nearest whole dollar amount. Loss amounts should be entered
with a minus sign.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe32ba39a-9c77-44d8-96ba-3f58ab272ce8%2F7774201c-1743-448f-8f8e-74a7ab76c06a%2Foomy6g_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Thermal Rising, Incorporated, makes paragliders for sale through specialty sporting goods stores. The company has a standard
paraglider model, but also makes custom-designed paragliders. Management 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
Management wants to calculate the profitability of a particular customer, Big Sky Outfitters, which 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
Activity Rate
$ 22 per direct labor-hour
$ 198 per order
262 per custom design
424 per customer
The company's direct labor rate is $22 per hour.
Customer margin
Standard
Model
875
456
Custom Des
32-28
$7589
Required:
Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters
Note: Round your Intermediate calculations and finel answer to the nearest whole dollar amount. Loss amounts should be entered
with a minus sign.
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