mjad rising Inc, makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider mode, but also makes custom designed paragliders. Management has designed an activity based costing system with the following activity cost pools and activity rates:
Standard model Custom Design
Number of gliders 20 3
Number of orders 1 3
Number of Custom designs 0 3
Direct Labor hours per glider 26.35 28.00
Selling price per glider Rs 1,850 Rs 2,400
Direct Material Cost per glider Rs 564 Rs 634
The company’s direct labor rate is Rs 19.5 per hour
Required: Using the company activity based costing system, compute the profitability of each of the two products ordered by Blue Sky Outfitter’s and the overall profitability of this customer.