How it was solved shown above is incorrect.

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: 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: The company's direct labor rate is $20 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.) Answer is complete but not entirely correct. Solution: Computation of overhead cost allocated to Big sky outfitters is as under: Activitv cost allocated to Bia Skv Outfitters EXPLANATION Overhead cost allocated = Sum of ( Activity rate of each activity Quantity of allocation base of each activity) Step 2/2 Computation of customer margin of Big sky outfitter is as under: EXPLANATION Customer margin is computed as = Sales - direct materials - Direct labor - Allocated overhead costs Final answer Customer margin of big sky outfitter as computed in step 2=$10,625