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 $ 259 per custom design
Customer service $ 418 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 11 3
Number of orders 1 3
Number of custom designs 0 3
Direct labor-hours per glider 26.50 32.00
Selling price per glider $ 1,750 $ 2,380
Direct materials cost per glider $ 456 $ 574
The company's direct labor rate is $16 per hour.
Required:
Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters. (Do not round intermediate calculations.)
Customer Margin??