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A service company, SUPER CLEAN, provides commercial and residentialdeaning services. The company is currently using a job costing system. Overhead are allocated based on the
A service company, SUPER CLEAN, provides commercial and residentialdeaning services. The company is currently using a job costing system. Overhead are allocated based on the direct labour hours. A. Traditional Costing with plant wide method: Using traditional costing the company calculated the overhead cost based on 19 000 hours of activity: Activity cost pools Estimated cost Receptionist $ 25,000 Office supplies $ 3,000 Gas $ 32,500 Depreciation $ 37,500 Total $198.000 Required - Part A: 1. Calculate the overhead rate using the plant wide method (one rate). I 2. Calculate the overhead rate using the departmental method for residential and commercial Provide your responses on the spreadsheet titled "Required 1 and 2. B. Activity Based Costing SUPER CLEAN realises that the traditional method of allocating overhead is not accurate because the gas and depreciation do not vary with direct labour. The company wants to use the activity-based costing system to allocate the costs of the receptionist, office supplies, gas and car usage depreciation) to get more accurate cost estimates. This information will help management to give more accurate quotes and improve the company's profitability Break-down of costs between commercial and residential cleanings Commercial Activity cost Estimated cost Cost driver (allocation Total Quantity of Unit A service company, SUPER CLEAN, provides commercial and residentialdeaning services. The company is currently using a job costing system. Overhead are allocated based on the direct labour hours. A. Traditional Costing with plant wide method: Using traditional costing the company calculated the overhead cost based on 19 000 hours of activity: Activity cost pools Estimated cost Receptionist $ 25,000 Office supplies $ 3,000 Gas $ 32,500 Depreciation $ 37,500 Total $198.000 Required - Part A: 1. Calculate the overhead rate using the plant wide method (one rate). I 2. Calculate the overhead rate using the departmental method for residential and commercial Provide your responses on the spreadsheet titled "Required 1 and 2. B. Activity Based Costing SUPER CLEAN realises that the traditional method of allocating overhead is not accurate because the gas and depreciation do not vary with direct labour. The company wants to use the activity-based costing system to allocate the costs of the receptionist, office supplies, gas and car usage depreciation) to get more accurate cost estimates. This information will help management to give more accurate quotes and improve the company's profitability Break-down of costs between commercial and residential cleanings Commercial Activity cost Estimated cost Cost driver (allocation Total Quantity of Unit
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