Accountant Junk Removal (AJR) has been in business for years. Due to recent poor results, AJR feel that that certain customers are more profitable than other customers are. AJR would like to know what type of customers they should be looking for to help to improve its profit.

It was decided that AJR adopt an Activity Based Costing method to help it better understand the costs associated with its revenue.

The following information was collected based on a study performed by AJR:

Activity Cost Pool		Activity Measure		Total Activity
Junk Removal		Per Lbs		500,000
Job Setup		Number of Jobs		200
Scheduling		Per Customer		25
Other		Not Applicable
			Distribute Across Activity Pools
	Junk Removal	Job Setup	Scheduling	Other
Junk Diposal	70%	0%	30%	0%
Insurance	40%	10%	40%	10%
Wages	40%	10%	35%	15%
General Admin	0%	50%	30%	20%
Depreciation	40%	10%	40%	10%
On-site Supplies	50%	20%	20%	10%

AJRs Budget is as follows:

Junk Disposal	600.000
Insurance	370.000
Wages	200.000
General Admin	168.000
Depreciation	80.000
On-site Supplies	60.000
Total Cost	1.478.000

AJR charges $2.50 per lbs removed.

Required:

1. Prepare a report to show allocation of costs to the Activity Cost Pools.
2. Compute the Active Rate for each Activity Cost Pool.
3. The details of 4 different customers are below. Calculate the costs of each customer using the Activity rates from part (b).

	Customer 1	Customer 2	Customer 3	Customer 4
lbs removed	100,000	100,000	75,000	15,000
Number Of jobs	5	40	10	25

4. Calculate the profit and profit % for each customer.
5. Based on the information from part (d), comment on the type of customers that AJR should be looking for to increase its profit.
6. What is an area of its business that AJR could focus on to improve its amount of profit (dollars not percentage)?