Question

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	$	16	per direct labor-hour
Order processing	$	198	per order
Custom design processing	$	267	per custom design
Customer service	$	424	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		2
Number of orders		1		2
Number of custom designs		0		2
Direct labor-hours per glider		27.50		31.00
Selling price per glider	$	1,675	$	2,310
Direct materials cost per glider	$	470	$	572

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. (Round your intermediate calculations and final answer to the nearest whole dollar amount. Loss amounts should be entered with a minus sign.)
(Got confused rather quick after 3rd step and forgot how to do it)

Answer 1

Answer-

CUSTOMER MARGIN- BIG SKY OUTFITTERS
USING ACTIVITY BASED COSTING METHOD
PRODUCTS		TOTAL
		$
Sales Value	($1675*11 gliders)+($2310*2 gliders)	23045
Less:-Costs
Direct materials	($470*11 gliders )+($572*2 gliders)	6314
Direct labor	{(27.50 hours*11 gliders)*$18 per hours}+(31.00 hours*2 gliders*$18 per hour)	6561
Supporting direct labor	{(27.50 hours*11 gliders)*$16 per hours}+(31.00 hours*2 gliders*$16 per hour)	5832
Order processing	(1 order+2 order)*$198 per order	594
Custom design processing	2 design*$267 per dsign	534
Customer service	1 customer*$424 per customer	424
Total costs		20259
Customer margin		2786