Thermal Rising, Inc., makes paragliders for sale throughspecialty sporting goods stores. The company has a standardparaglider model, but also makes custom-designed paragliders.Management has designed an activity-based costing system with thefollowing activity cost pools and activity rates:
Activity Cost Pool Activity Rate
Supporting direct labor $20 per direct labor-hour
Order processing $192 per order
Custom designing processing $255 per custom design
Customer service $428 per customer
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Management would like an analysis of the profitability of aparticular customer, Big Sky Outfitters, which has ordered thefollowing products over the last 12 months:
Standard
Model Custom
Design
Number of gliders 11 3
Number of orders 1 3
Number of custom designs 0 3
Direct labor-hours per glider 27.50 33.00
Selling price per glider $1,600 $2,320
Direct materials cost per glider $472 $580
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The company's direct labor rate is $22 per hour.
Required:
Using the company's activity-based costing system, compute thecustomer margin of Big Sky Outfitters. (Round intermediatecalculations and final answer to the nearest whole number. Omit the"$" sign in your response.)
