Jarred perea operates Daddy's Nursery which provides baby-sitting services for children between 2 to 5years old....
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Jarred perea operates Daddy's Nursery which provides baby-sitting services for children between 2 to 5years old. Working mothers leave their children at 8:00 am and pick them up after office hours. Jarred converted his house into a nursery home where children are provided with sleeping areas, play pen, and study areas, as well as meals, milk, and snacks. Nursery fee is computed by adding a markup to the total cost of service provided to each child. At present, Jarred uses the traditional costing system in computing the cost of service per child, where the total cost is divided by the number of children served. During the previous month, the nursery served 100 children, for which the company incurred P70,000 total cost of service. Jarred observed, however, that it is not right to just divide the total cost by the number of children because incurrence of some costs may vary depending on some factors. For example, children between 2 to 3 years old need more attention and are provided more services than those above 3 years old. Considering this, Jarred plans to apply ABC system in determining the cost of service per child. He conducted a study of the previous month's operations, and the following results came out: Cost Category Meals, snacks, supplies Cost Cost Driver Cost Driver Quantity P40,000 Number of children 100 chidren Caregiving (nursing assistance and tutorials) P60,000 Staff hour 1,200 staff hour Children Category Number of Children Staff Hours Babies (2-3 year old) Kiddies (above 3 years old) 60 40 1,000 200 A. If the traditional costing system were used and nursery fee was computed at 300% of the cost of service per child, Daddy's Nursery could have charged each child a fee of (5 Points) B. If the ABC system were used, nursery fee per child should have been(5 Points) Jarred perea operates Daddy's Nursery which provides baby-sitting services for children between 2 to 5years old. Working mothers leave their children at 8:00 am and pick them up after office hours. Jarred converted his house into a nursery home where children are provided with sleeping areas, play pen, and study areas, as well as meals, milk, and snacks. Nursery fee is computed by adding a markup to the total cost of service provided to each child. At present, Jarred uses the traditional costing system in computing the cost of service per child, where the total cost is divided by the number of children served. During the previous month, the nursery served 100 children, for which the company incurred P70,000 total cost of service. Jarred observed, however, that it is not right to just divide the total cost by the number of children because incurrence of some costs may vary depending on some factors. For example, children between 2 to 3 years old need more attention and are provided more services than those above 3 years old. Considering this, Jarred plans to apply ABC system in determining the cost of service per child. He conducted a study of the previous month's operations, and the following results came out: Cost Category Meals, snacks, supplies Cost Cost Driver Cost Driver Quantity P40,000 Number of children 100 chidren Caregiving (nursing assistance and tutorials) P60,000 Staff hour 1,200 staff hour Children Category Number of Children Staff Hours Babies (2-3 year old) Kiddies (above 3 years old) 60 40 1,000 200 A. If the traditional costing system were used and nursery fee was computed at 300% of the cost of service per child, Daddy's Nursery could have charged each child a fee of (5 Points) B. If the ABC system were used, nursery fee per child should have been(5 Points)
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Related Book For
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr
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