SG Limited provides gardening services to its clients. The company uses an activity-based costing system and has provided the following data for last year:

Activity Cost Pool Total Cost $ Total Activity

Gardening $650,000 162,500 hours

Job Support $127,680 3,800jobs

Client Support $42,000 700clients,

Others $74,070

Total $893,750

The "others" activity cost pool consists of the costs of idle capacity and organization sustaining costs. One particular client, the Tan Company, requested 20 jobs during the year that required a total of 150 hours of gardening. For this service, the client was charged $3,000.

Required:

1.) Compute the activity rates for the activity cost pools.

2.) Using the activity-based costing system, compute the customer profit for the Tan and Company.

3.) If the company decides instead to use a traditional costing system in which ALL costs are allocated to customers on the basis of gardening hours, compute the customer profit based on this method for the Tan Company.

4.) Comment on your findings for 2 and 3