Home / Questions / EXERCISE 7 5 Product and Customer Profitability Analysis O4 LO5 Updraft Systems Inc makes ...
EXERCISE 7–5 Product and Customer Profitability Analysis [LO4, LO5]
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. Manage- ment 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, Eagle Wings, which has ordered the following products over the last 12 months:
The company’s direct labor rate is $19 per hour.
Required:
Using the company’s activity-based costing system, compute the customer margin of Eagle Wings.
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