Thermal Rising, Incorporated, makes paragliders for sale through specialty sporting goods stores. The company has a standardparaglider model, but also makes custom-designed paragliders. Management has designed an activity-based costing system with thefollowing activity cost pools and activity rates:Activity Coat PoolSupporting direct laborOrder processingCustom design processingCustomer serviceManagement would like an analysis of the profitability of a particular customer, Big Sky Outfitters, which has ordered the followingproducts over the last 12 months:Number of glidersNumber of ordersNumber of custom designsDirect labor-houra per gliderActivity Rate$ 20 per direct labor-hour$ 198 per order$267 per custom design$ 420 per customerSelling price per gliderDirect materials cost per gliderThe company's direct labor rate is $20 per hour.Customer marginStandardModel142027.50$1,875$ 472CustomDesign22234.00$ 2,490$586Required:Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters.Note: Round your intermediate calculations and final answer to the nearest whole dollar amount. Loss amounts should be enteredwith a minus sign.

ACTIVITY BASED COSTINGActivity Based Costing is a powerful tool for measuring…

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 Coat Pool Supporting direct labor Order processing Custom design processing Customer service Number of gliders Number of orders Number of custom designs Direct labor-houra per glider Activity Rate per direct labor-hour per order 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: $ 20 $ 198 $267 per custom design $ 420 per customer Selling price per glider Direct materials cost per glider The company's direct labor rate is $20 per hour. Customer margin Standard Model 14 2 0 27.50 $ 1,875 $ 472 Custom Design 2 2 2 34.00 $ 2,490 $586 Required: Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters. Note: Round your intermediate calculations and final answer to the nearest whole dollar amount. Loss amounts should be entered with a minus sign.

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 Coat Pool Supporting direct labor Order processing Custom design processing Customer service Number of gliders Number of orders Number of custom designs Direct labor-houra per glider Activity Rate per direct labor-hour per order 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: $ 20 $ 198 $267 per custom design $ 420 per customer Selling price per glider Direct materials cost per glider The company's direct labor rate is $20 per hour. Customer margin Standard Model 14 2 0 27.50 $ 1,875 $ 472 Custom Design 2 2 2 34.00 $ 2,490 $586 Required: Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters. Note: Round your intermediate calculations and final answer to the nearest whole dollar amount. Loss amounts should be entered with a minus sign.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 8CE: Electan Company produces two types of printers. The company uses ABC, and all activity drivers are...

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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: Required:Using the company’s activity-based costing system, compute the customer margin of Big Sky Outfitters.
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 Supporting direct labor Order processing Custom design processing Customer service 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: Number of gliders Number of orders Number of custom designs Direct labor-hours per glider Selling price per glider Direct materials cost per glider. Activity Rate $ 18 per direct labor-hour $184 per order $267 per custom design $426 per customer Standard Custom Model Design Customer margin The company's direct labor rate is $16 per hour. 15 2 0 3 3 3 33.00 29.50 $1,625 $2,370 $ 462 $ 570 Required: Using the company's activity-based…
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 Supporting direct labor Order processing Custom design processing Customer service Number of gliders Number of orders 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: Number of custom designs Direct labor-hours per glider Activity Rate $ 20 per direct labor-hour $ 198 per order $ 265 per custom design $ 422 per customer Selling price per glider Direct materials cost per glider The company's direct labor rate is $16 per hour. Customer margin Standard Model 13 1 0 28.50 $ 1,925 $ 452 Custom Design 3 3 3 31.00 $ 2,420 $ 584 Required: Using the company's…
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: Activity Cost Pool Supporting direct labor Order processing Custom design processing Customer service Number of gliders Number of orders Management wants to calculate the profitability of a particular customer, Big Sky Outfitters, which ordered the following products over the last 12 months: Number of custom designs Direct labor-hours per glider Activity Rate $20 per direct labor-hour $ 186 per order $ 263 per custom design $ 422 per customer Selling price per glider Direct materials cost per glider The company's direct labor rate is $16 per hour. Customer margin Standard Model 13 1 0 28.50 $ 1,875 $ 464 Custom Design 3 3 3 32.00 $ 2,440 $ 584 Required: Using the company's activity-based…
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 Supporting direct labor Order processing Custom design processing Customer service 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: Number of gliders Number of orders Number of custom designs Direct labor-hours per glider Activity Rate $20 per direct labor-hour $186 per order $262 per custom design $426 per customer Selling price per glider Direct materials cost per glider The company's direct labor rate is $18 per hour. Customer margin Standard Model 12 1 0 28.50 $ 1,850 $ 464 Custom Design 3 3 3 34.00 $ 2,500 $ 580 Required: Using the company's…
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 Supporting direct labor Order processing Custom design processing Customer service 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: Number of gliders Number of orders. Number of custom designs Direct labor-hours per glider Activity Rate $ 16 per direct labor-hour $ 186 per order $ 251 per custom design $ 418 per customer Selling price per glider Direct materials cost per glider The company's direct labor rate is $18 per hour. Customer margin Standard Model 11 2 0 29.50 $1,850 $ 476 Custom Design 3 3 3 33.00 $ 2,430 $578 Required: Using the company's…
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 Supporting direct labor Order processing Custom design processing Customer service 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: Number of gliders Number of orders Number of custom designs Direct labor-hours per glider Activity Rate $26 per direct labor-hour $ 284 per order $ 186 per custom design $ 379 per customer Selling price per glider Direct materials cost per glider The company's direct labor rate is $19.50 per hour. Customer margin I Standard Model 20 1 0 26.35 $ 1,850 $ 564 Custom Design 3 3 3 Required: Using the company's activity-based…
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 Supporting direct labor Order processing Custom design processing Customer service Number of gliders Number of orders Activity Rate $16 per direct labor-hour 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: $ 198 per order. $260 per custom design $ 422 per customer Number of custom designs Direct labor-hours per glider Selling price per glider Direct materials cost per glider. The company's direct labor rate is $18 per hour. Customer margin Standard Model 16 1 0 27.50 $ 1,925 $452 Custom Design 2 2 2 32.00 $ 2,490 $582 Required: Using the company's…
Consumer Focus is a marketing research firm that organizes focus groups for consumerproduct companies. A Consumer Focus Staff member attends each session to ensure that all the logistical aspects run smoothly”In light to the above statement, classify each of the following cost items as:a. Direct or Indirect (D or I) costs with respect to each individual focus group.b. Variable or Fixed (V or F) costs with respect to how the total costs of Consumer Focus change as the number of focus groups conducted changes. (If in doubt, select on the basis of whether the total costs will change substantially if there is a large change in the number of groups conducted.)You will have two answers (D or I; V or F) for each of the following items followed by a short interpretation note. Use the sample answer table and continue from Cost Item BCost ItemA. Payment to individual in each focus group to provide comments on new products.B. Annual subscription of Consumer Focus to Consumer Reports magazine.C.…
Central Perk, LLC, a manufacturer of coffee beans, is considering switching its operations to an Activity Based Costing system. The following manufacturing overhead activities and cost drivers have been identified: Activity. Machine setup Machine assembly Product inspection Product movement General factory Cost Driver Number of machine setups Machine hours logged Inspection hours logged Number of moves Machine hours logged Based on the above descriptions, which of the following correctly pairs the activity with its appropriate cost level? O A. Product Inspection... batch level cost OB. Product Movement... facility level cost O C. Machine Assembly... unit level cost O D. General Factory... batch level cost O E. Machine Setup... unit level cost
ell Computer incurs the following costs: LOADING... (Click the icon to view the costs.) Requirement Classify each of the cost items (a-h) into one of the business functions of the value chain. Cost Item Value Chain Business Function a. Utility costs for the plant assembling the Latitude computer line of products b. Distribution costs for shipping the Latitude line of products to a retail chain c. Payment to David Newbury Designs for design of the XPS 2-in-1 laptop d. Salary of computer scientist working on the next generation of servers e. Cost of Dell employees' visit to a major customer to demonstrate Dell's
Colby Company makes cases for cell phones of all sizes and types for sale through specialty retailers. The company makes a standard model for the most recent iPhone as well as a deluxe model. Management has designed an ABC system with the following activity cost pools and activity rates for these models: Activity Cost Pool Supporting manufacturing Order processing Customer service Activity Rates 2 per direct labour-hour 21 per order 75 per customer Management would like an analysis of the profitability of a particular customer, Cell City, which has ordered the following products over the last 12 months: Standard Model Deluxe Model Number of cases 160 35 Number of orders Direct labour-hours per case Selling price per case Direct materials cost per case 2 0.25 0.40 40 65 12 $ 15 The company's direct labour rate is $24 per hour. Required: Using the company's ABC system, compute the customer margin of Cell City.