Question
Emerson Evergreen, a landscaping services company, uses an activity-based costing system for its overhead costs. The company has provided the following data from its activity-based
Emerson Evergreen, a landscaping services 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 Landscaping $101,574 16,200 hours Job support 32,724 1,800 jobs Client support. 5,472 320 clients Other 100,000 Not applicable Total $239,770
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. During the year, the Gallimore family requested 32 jobs that required a total of 192 hours of landscaping. For this service, the Gallimore family was charged $2,200. Required: a. Using the activity-based costing system, compute the client margin for the Gallimore family. Round off all calculations to the nearest whole cent. b. Assume the company decides instead to use a traditional costing system in which ALL costs are allocated to clients on the basis of landscaping hours. Compute the margin for the Gallimore family. Round off all calculations to the nearest whole cent.
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