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:

AJRs Budget is as follows:

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).

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)?