Can any one help with these questions?
Sparkling Housecleaning 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...
$645,576
72,700
Hours
Job support...
$129,546
5,400
Jobs
Client support...
$ 20,900
760
Clients
Other...
$110,000
Not applicable
Total...
$906,022
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
One particular client, the Lotus family, requested 31 jobs during the year that required a total of 62 hours of housecleaning. For this service, the client was charged $1,620
Questions:
1. Using the activity-based costing system, compute the customer margin for the Lotus family. Round off all calculations to the nearest whole cent (3 points).
2. 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 Lotus family. Round off all calculations to the nearest whole cent (4 points).
