Exercise $5-5($Static$)$ Product and Customer Profitability Analysis $[$LO$5-4,$ LO$5-5]$

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 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 $203$

Number of orders $13$

Number of custom designs $03$

Direct labor$-$hours per glider $26\mathrm{.}3528\mathrm{.}00$

Selling price per glider $ $1,850$ $ $2,400$

Direct materials cost per glider $ $564$ $ $634$

The company$$s direct labor rate is $$19\mathrm{.}50$ per hour.

Required:

Using the company$$s activity$-$based costing system, compute the customer margin of Big Sky Outfitters