Exercise $7-5($Static$)$ Product and Customer Profitability Analysis $[$LO$7-4,$ LO$7-5]$

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 designed an activity$-$based costing system with the following activity cost pools and activity rates:

$\backslash$table$[[$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 wants to calculate the profitability of a particular customer, Big Sky Outfitters, which ordered the following products ove the last $12$ months:

$\backslash$table$[[$Number of gliders,$\backslash$table$[[$Standard$],[$Model$]],\backslash$table$[[$Custom$],[$Design$]]],[$Number of orders,$20,3],[$Number of custom designs,$1,3],[$Direct labor$-$hours per glider,$0,3],[$Selling price per glider,$26\mathrm{.}35,28\mathrm{.}00],[$Direct materials cost per glider,$$1,850,$$$2,400$

Exercise $7-7($Static$)$ First$-$Stage Allocations $[$LO$7-2]$

The operations vice president of Security Home Bank is investigating the efficiency of the bank's operations. She is concerned about the costs of handling routine transactions at the bank and would like to compare these costs at the bank's various branches. If the branches with the most efficient operations can be identified, their methods can be studied and replicated elsewhere. While the bank maintains meticulous records of wages and other costs, there has been no attempt to show how those costs are related to the various services provided by the bank. The operations vice president has asked for your help in conducting an activity$-$based costing study of bank operations. In particular, she would like to know the cost of opening an account, the cost of processing deposits and withdrawals, and the cost of processing other customer transactions.

The Westfield branch of Security Home Bank submitted the following cost data for last year:

$\backslash$table$[[$Teller wages,$$160,000$