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Johnson Gardening Company provides lawn and garden services to its clients. The company uses an activity-based costing system for its overhead costs. The company has
Johnson Gardening Company provides lawn and garden 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 Mowing/trimming $160,500 15,250 hours Job support 28,575 1,700 jobs Client support 6,750 285 clients Other 100,000 Not applicable Total $295,825 The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. One particular client, the Guzman family, requested 24 jobs during the year that required a total of 175 hours of gardening. For these services, the client was charged $4,000. Required: a. Compute the activity rates for the activity cost pools. Round off all calculations for the nearest whole cent. b. Using the activity-based costing system, compute the customer margin for the Guzman 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 mowing/trimming hours. Compute the margin for the Guzman family. Round off all calculations to the nearest whole cent
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