Business, 06.05.2020 03:42 drakesmith43

Retired Professor Housecleaning provides housecleaning services to its clients. The company uses an activity-based costing system for its overhead costs. The company has provided the following data from its activity-based costing system.

Activity Cost Pool Total Cost Total Activity
Cleaning $645,576 72,700 hours
Job support $129,546 5,400 jobs
Client support $20,900 760 clients
Other $110,547 Not applicable
Total $906,569

The "Other" activity cost pool consists of the cost of idle capacity based on a normal capacity measure. One particular client, the Anderson family, requested 31 jobs during the year that required a total of 62 hours of housecleaning. For this service, the client was charged $1,620.
Required:
a. Compute the activity rates (i. e., cost per unit of activity) for the activity cost pools. Round off all calculations to the nearest whole cent.
b. Using the activity-based costing system, compute the customer margin for the Anderson family. Round off all calculations to the nearest whole cent.
c. Assume the company decides instead to use a traditional costing system in which ALL costs are allocated to customers on the basis of cleaning hours. Compute the margin for the Anderson family. Round off all calculations to the nearest whole cent.

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Retired Professor Housecleaning provides housecleaning services to its clients. The company uses an...

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