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Thermal Rising, Inc., makes paragliders for sale through specialty sporting goods stores. The company has a...

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 ....................... $26 per direct labor-hour

Order processing ................................ $284 per order

Custom design processing ................. $186 per custom design

Customer service ............................... $379 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

20

3

Number of orders

1

3

Number of custom designs

0

3

Direct labor-hours per glider

26.35

28

Selling price per glider

$ 1850

$ 2400

Direct materials cost per glider

$ 564

$ 634

The company’s direct labor rate is $19.50 per hour.

Required:

Using the company’s activity-based costing system, compute the total customer margin.

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