Answered step by step
Verified Expert Solution
Question
1 Approved Answer
1. Lightning Housecleaning provides housecleaning services to its clients. The company uses an activity-based costing system for its overhead costs. The company has provided the
1. Lightning 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 Cleaning Job support Client support Other Total Total Cost (RM) 442,068 52,801 9,170 110,000 614,039 Total Activity 78,800 hours 1,900 jobs 350 clients Not applicable The "Other" activity cost pool consists of the costs of idle capacity and organization- sustaining costs. One particular client, the Chan family, requested 46 jobs during the year that required a total of 92 hours of housecleaning. For this service, the client was charged RM2,230. Required: a. Compute the activity rates (i.e., cost per unit of activity) for the activity cost pools. Round off all calculations to two decimal places. (3 marks) b. Using the activity-based costing system, compute the customer margin for the Chan family. Round off all calculations to two decimal places. (10 marks) 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 Chan family. Round off all calculations to two decimal places. (4 marks) [17 marks]
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started