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4. The Spill Cleaning Company provides housecleaning services to its clients. The company uses an activity-based costing system for its overhead costs. The company
4. The Spill Cleaning Company 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.. 1,200,000 50,000 hours Job support. 200,000 5,000 jobs Client support.. 50,000 1,000 clients Other..... 450,000 Not applicable Total. 1.900.000 The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. One client, the Simpson family, requested 20 jobs during the year that required 200 hours of housecleaning. For this service, the client was charged $7,000. a. Using the activity-based costing system, compute the customer margin for the Simpson family. Round off all calculations to the nearest whole cent. (8 PTS) b. 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 Simpson family. Round off all calculations to the nearest whole cent. (8 PTS) I
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