1. LMN Services

Scenario: Activity-Based Costing (ABC)

Data: LMN Services offers two types of services: Service A and Service B. The following information is available:

• Service A: Total costs $100,000, Total units of activity 1,000
• Service B: Total costs $150,000, Total units of activity 2,000

Requirements:

1. Calculate the cost per unit of activity for Service A and Service B using activity-based costing.
2. Determine the cost allocation rate for overhead based on activity-based costing.
3. Discuss how activity-based costing improves cost accuracy for LMN Services.
4. Analyze the profitability of each service using activity-based costing data.
5. Evaluate LMN Services' service pricing strategy based on activity-based costing insights.