Updraft Systems, 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 manufacturing
$18 per direct labor-hour
Order processing
$184 per order
Custom designing
$255 per custom design
Customer service
$426 per customer
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Management would like an analysis of the profitability of a particular customer, Eagle Wings, which has ordered the following products over the last 12 months:
Standard Model : Custom Design
Number of gliders 13 : 3
Number of orders 2 : 3
Number of custom designs 0 : 3
Direct labor-hours per glider 29.50 : 32
Selling price per glider $1,725 : $2,350
Direct materials cost per glider $478 : $576
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The company's direct labor rate is $18 per hour.
Using the company's activity-based costing system, compute the customer margin of Eagle Wings.
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