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The Holiday Cleaning Company provides housecleaning services to its clients. The company uses an activity-based costing system for its overhead costs. The company has provided

The Holiday Cleaning Company provides housecleaning 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

Cleaning.................

$900,000

30,000

hours

Job support............

200,000

5,000

jobs

Client support........

40,000

400

clients

Other......................

360,000

Not

applicable

Total.......................

1,500,000

The Other activity cost pool consists of the costs of idle capacity and organization-sustaining costs.

One client, the Booker family, requested 20 jobs during the year that required 100 hours of housecleaning. For this service, the client was charged $4,500.

  1. Using the activity-based costing system, compute the customer margin for the Booker family. Round off all calculations to the nearest whole cent.

  1. Assume the company decides instead to use a traditional costing system in which ALL costs are allocated to customers on the basis of cleaning hours. Compute the margin for the Booker family. Round off all calculations to the nearest whole cent.

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