Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Andracki 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

Andracki 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

Total Cost

Total Activity

Cleaning

$442,068

78,800 hours

Job support

52,801

1,900 jobs

Client support

9,170

350 clients

Other

110,000

Not applicable

Total

$614,039

The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.

One particular client, the Lason family, requested 46 jobs during the year that required a total of 92 hours of housecleaning. For this service, the client was charged $2,230. Required: a. Compute the activity rates (i.e., cost per unit of activity) for the activity cost pools. Round off all calculations to the nearest whole cent. b. Using the activity-based costing system, compute the customer margin for the Lason family. Round off all calculations to the nearest whole cent. 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 Lason family. Round off all calculations to the nearest whole cent.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Stacey Whitecotton, Robert Libby, Fred Phillips

4th edition

1259964957, 1260413985, 1260565440, 978-1260413984

More Books

Students also viewed these Accounting questions