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Question(s) / Instruction(s):

Andracki 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             $              442,068                   78,800 hours 

  Job support                     52,801    1,900 jobs 

  Client support                9,170       350 clients 

  Other                 110,000                   Not applicable 

                                 

  Total    $              614,039                  

 

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

One particular client, the Lason family, requested 46 jobs during the year that required a total of 92 hours of housecleaning. For this service, the client was charged $2,230.

 

Required:

  1. Compute the activity rates (i.e., cost per unit of activity) for the activity cost pools. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)
  2. Using the activity-based costing system, compute the customer margin for the Lason family. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)
  3. 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 Lason family. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

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