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Curtis & Company is an architectural firm specializing in home remodeling for private clients and new office buildings for corporate clients. Curtis & Company
Curtis & Company is an architectural firm specializing in home remodeling for private clients and new office buildings for corporate clients. Curtis & Company charges customers 125% of their total job cost. Total job cost is equal to 1) professional cost, based on the professional hours actually spent on the client's job, and 2) operating cost, allocated to the client's job. The firm currently uses a "single driver" allocation system, with the number of professional hours spent on client jobs as the cost driver, but its accountant has decided to replace the single driver system with an "activity-based costing" system, starting in 2023. The accountant estimates that its five professional architects will work a total of 10,000 hours on client jobs in 2023. For the new activity-based costing system, the accountant has grouped all of the firm's operating costs into the following three activities, along with estimated cost and activity information: Activity Transportation to clients Blueprint copying Office support Total operating costs Total Activity Cost Cost Driver $11,300 Round-trip mileage to clients Total Usage by Clients 13,000 miles $33,300 $197,500 $242,100 Number of copies Secretarial time 950 copies 3,000 hours Amy Lee is considering hiring Curtis & Company to design her kitchen remodeling in January of 2023. Curtis thinks the job will require 25 hours of professional time. In addition, estimates are that the professionals will have to drive a total of 150 miles back and forth to Lee's house, that three copies of the blueprints will be required, and that 15 hours of secretarial time will be spent lining up subcontractors, suppliers, etc for the job. REQUIRED [Round all allocation rates to two decimal places and allocations to the nearest dollar.] Part A [5 tries; 5 points] What would the estimated operating cost of Amy Lee's remodeling job have been under the current single driver system? [Submit Answer] Tries 0/5 Part B [5 tries; 5 points] What will the estimated operating cost of Amy Lee's remodeling job be under the activity-based costing system? Submit Answer Tries 0/5
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