Please provide detailed explanation with formulas used to derive the answers:

A service company, SUPER CLEAN, provides commercial and residential cleaning services. The company is currently using a job costing system. Overhead are allocated based on the direct labour hours. A. Traditional Costing with plant wide method: Using traditional costing the company calculated the overhead cost based on 20 000 hours of activity: Activity cost pools Receptionist Office supplies Gas Depreciation Total Estimated cost $ 25,000 $ 3,000 $ 32,500 $ 37,500 $ 98,000 Required - Part A: 1. Calculate the overhead rate using the plant wide method (one rate). 2. Calculate the overhead rate using the departmental method for residential and commercial. Allocate 13 000 hours to Commercial and 7 000 hours to Residential cleaning department. Provide your responses on the spreadsheet titled "Required 1 and 2'. SUPER CLEAN Costs For base year Estimated cost Allocation base Activity cost pools Receptionist Office supplies Gas Depreciation Total hrs Plant-wide overhead allocation >> Required 1 Estimated cost Allocation base Commercial Activity cost pools Receptionist Office supplies Gas Depreciation Total hrs Commercial overhead rate Required 2 Estimated cost Allocation base Residential Activity cost pools Receptionist Office supplies Gas Depreciation Total hrs Required 2 Residential overhead rate B. Activity Based Costing: SUPER CLEAN realises that the traditional method of allocating overhead is not accurate because the gas and depreciation do not vary with direct labour. The company wants to use the activity-based-costing system to allocate the costs of the receptionist, office supplies, gas and car usage (depreciation) to get more accurate cost estimates. This information will help management to give more accurate quotes and improve the company's profitability. Break-down of costs between commercial and residential cleanings. Commercial Activity cost pools Receptionist Office supplies Gas Depreciation Total Estimated cost Cost driver (allocation based) $ 13,000 Direct labour hour $ 1,500 | Direct labour hour $ 13,000 KM $ 15,000 KM $ 42,500 Total Quantity of Unit allocation based 13,000 hour 13,000 hour 120,000 KM 120,000 KM Residential Activity cost pools Receptionist Office supplies Gas Depreciation Total Estimated cost Cost driver (allocation based) $ 12,000 Direct labour hour $ 1,500 Direct labour hour $ 19,500 KM $ 22,500 KM $ 55,500 Total Quantity of Unit allocation based 7,000 hour 7,000 hour 130,000 KM 130,000 KM The direct labour is $20/hour and the cleaning supplies (direct material) cost is $6.50 per liter. The cleaning supplies are 0.2 liter per labour hour for commercial cleaning and 0.1 liter per labour hour for residential cleaning. During the week, SUPER CLEAN worked on two jobs. Direct labour Direct material Job 1 (residential) 130 hours 0.1 liter per direct labour hour 1,600 KM Job 2 (commercial) 190 hours 0.2 liter per direct labour hour 1,200 KM KM Required - Part B: 3. Calculate the overhead rates for each activity cost pool for commercial and residentialcleanings. Provide your response on the spreadsheet titled "Required 3'. 4. Estimate the total overhead costs and overhead cost per unit hour for each job. 5. Estimate the total costs (including direct labour and material) and total cost per unit for job 1 (residential) and job 2 (commercial). 6. Estimate total cost for Jobs 1 and 2 using traditional costing Provide your responses on the spreadsheet titled 'Required 4-5-6'. Job 1 (residential) Job 2 (commercial) (Ctrl) Variable costs Direct labour Direct material Total >> Required 5 Total costs Total costs per unit Traditional costing 5 -6 Job 1 (residential) Job 2 (commercial) 7 8 Direct labour 9 Direct material 0 Direct Overhead 1 Total 2 3 Cost per unit 4 >>>> Required 6 B D G H Estimated cost Commercial Activity cost pools Receptionist Office supplies Total Quantity of allocation based Rates Cost driver (allocation based) Direct labour hour Direct labour hour KM Unit hour hour KM KM per direct labour hour per direct labour hour Gas per KM per KM KM Depreciation Total Estimated cost Total Quantity of allocation based Rates Residential Activity cost pools Receptionist Office supplies Gas Depreciation Total Cost driver (allocation based) Direct labour hour Direct labour hour Unit hour hour KM KM per direct labour hour per direct labour hour per KM per KM KM KM quired 1.5.6 Rubric and grades Required - Part C: 7. Write a memo to the CEO of SUPERCLEAN with your recommendation as to which of the two costing methods (Traditional or Activity Based Costing), they should adopt? Backup your recommendation by including the following discussion points: At least two advantages of Activity Based Costing At least two disadvantages of Activity Based Costing At least two challenges that can arise in implementing Activity Based Costing The memo should be no more than 250 words, 1.5 line spacing, Arial font and MS Word format. I . Job 1 (residential) Labour rate Cleaning supplies $20.00 $6.50 Direct labour hour Direct material liter per DLH KM Job 2 (commercial) 130 0.10 1,600 190 0.20 1,200 Job 1 (residential) Activity Based Costing Job 2 (commercial) Fixed costs (overhead) Receptionist Office supplies Gas Depreciation Total Overhead cost per unit >>> Required 4 A service company, SUPER CLEAN, provides commercial and residential cleaning services. The company is currently using a job costing system. Overhead are allocated based on the direct labour hours. A. Traditional Costing with plant wide method: Using traditional costing the company calculated the overhead cost based on 20 000 hours of activity: Activity cost pools Receptionist Office supplies Gas Depreciation Total Estimated cost $ 25,000 $ 3,000 $ 32,500 $ 37,500 $ 98,000 Required - Part A: 1. Calculate the overhead rate using the plant wide method (one rate). 2. Calculate the overhead rate using the departmental method for residential and commercial. Allocate 13 000 hours to Commercial and 7 000 hours to Residential cleaning department. Provide your responses on the spreadsheet titled "Required 1 and 2'. SUPER CLEAN Costs For base year Estimated cost Allocation base Activity cost pools Receptionist Office supplies Gas Depreciation Total hrs Plant-wide overhead allocation >> Required 1 Estimated cost Allocation base Commercial Activity cost pools Receptionist Office supplies Gas Depreciation Total hrs Commercial overhead rate Required 2 Estimated cost Allocation base Residential Activity cost pools Receptionist Office supplies Gas Depreciation Total hrs Required 2 Residential overhead rate B. Activity Based Costing: SUPER CLEAN realises that the traditional method of allocating overhead is not accurate because the gas and depreciation do not vary with direct labour. The company wants to use the activity-based-costing system to allocate the costs of the receptionist, office supplies, gas and car usage (depreciation) to get more accurate cost estimates. This information will help management to give more accurate quotes and improve the company's profitability. Break-down of costs between commercial and residential cleanings. Commercial Activity cost pools Receptionist Office supplies Gas Depreciation Total Estimated cost Cost driver (allocation based) $ 13,000 Direct labour hour $ 1,500 | Direct labour hour $ 13,000 KM $ 15,000 KM $ 42,500 Total Quantity of Unit allocation based 13,000 hour 13,000 hour 120,000 KM 120,000 KM Residential Activity cost pools Receptionist Office supplies Gas Depreciation Total Estimated cost Cost driver (allocation based) $ 12,000 Direct labour hour $ 1,500 Direct labour hour $ 19,500 KM $ 22,500 KM $ 55,500 Total Quantity of Unit allocation based 7,000 hour 7,000 hour 130,000 KM 130,000 KM The direct labour is $20/hour and the cleaning supplies (direct material) cost is $6.50 per liter. The cleaning supplies are 0.2 liter per labour hour for commercial cleaning and 0.1 liter per labour hour for residential cleaning. During the week, SUPER CLEAN worked on two jobs. Direct labour Direct material Job 1 (residential) 130 hours 0.1 liter per direct labour hour 1,600 KM Job 2 (commercial) 190 hours 0.2 liter per direct labour hour 1,200 KM KM Required - Part B: 3. Calculate the overhead rates for each activity cost pool for commercial and residentialcleanings. Provide your response on the spreadsheet titled "Required 3'. 4. Estimate the total overhead costs and overhead cost per unit hour for each job. 5. Estimate the total costs (including direct labour and material) and total cost per unit for job 1 (residential) and job 2 (commercial). 6. Estimate total cost for Jobs 1 and 2 using traditional costing Provide your responses on the spreadsheet titled 'Required 4-5-6'. Job 1 (residential) Job 2 (commercial) (Ctrl) Variable costs Direct labour Direct material Total >> Required 5 Total costs Total costs per unit Traditional costing 5 -6 Job 1 (residential) Job 2 (commercial) 7 8 Direct labour 9 Direct material 0 Direct Overhead 1 Total 2 3 Cost per unit 4 >>>> Required 6 B D G H Estimated cost Commercial Activity cost pools Receptionist Office supplies Total Quantity of allocation based Rates Cost driver (allocation based) Direct labour hour Direct labour hour KM Unit hour hour KM KM per direct labour hour per direct labour hour Gas per KM per KM KM Depreciation Total Estimated cost Total Quantity of allocation based Rates Residential Activity cost pools Receptionist Office supplies Gas Depreciation Total Cost driver (allocation based) Direct labour hour Direct labour hour Unit hour hour KM KM per direct labour hour per direct labour hour per KM per KM KM KM quired 1.5.6 Rubric and grades Required - Part C: 7. Write a memo to the CEO of SUPERCLEAN with your recommendation as to which of the two costing methods (Traditional or Activity Based Costing), they should adopt? Backup your recommendation by including the following discussion points: At least two advantages of Activity Based Costing At least two disadvantages of Activity Based Costing At least two challenges that can arise in implementing Activity Based Costing The memo should be no more than 250 words, 1.5 line spacing, Arial font and MS Word format. I . Job 1 (residential) Labour rate Cleaning supplies $20.00 $6.50 Direct labour hour Direct material liter per DLH KM Job 2 (commercial) 130 0.10 1,600 190 0.20 1,200 Job 1 (residential) Activity Based Costing Job 2 (commercial) Fixed costs (overhead) Receptionist Office supplies Gas Depreciation Total Overhead cost per unit >>> Required 4