The Spurling Cleaning Brigade 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. The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
One particular client, the Vandal family, requested 32 jobs during the year that required a total of 192 hours of housecleaning. For this service, the client was charged $2,200.
Required:
a. Using the activity-based costing system, compute the customer margin for the Vandal family. Round off all calculations to the nearest whole cent.
b. 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 Vandal family. Round off all calculations to the nearest whole cent.

Question

The Spurling Cleaning Brigade 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.  The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
One particular client, the Vandal family, requested 32 jobs during the year that required a total of 192 hours of housecleaning. For this service, the client was charged $2,200.
Required:
a. Using the activity-based costing system, compute the customer margin for the Vandal family. Round off all calculations to the nearest whole cent.
b. 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 Vandal family. Round off all calculations to the nearest whole cent.

Quizplus · Accepted Answer

The Answer of The Spurling Cleaning Brigade 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.  The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
One particular client, the Vandal family, requested 32 jobs during the year that required a total of 192 hours of housecleaning. For this service, the client was charged $2,200.
Required:
a. Using the activity-based costing system, compute the customer margin for the Vandal family. Round off all calculations to the nearest whole cent.
b. 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 Vandal family. Round off all calculations to the nearest whole cent.

The Spurling Cleaning Brigade Company Provides Housecleaning Services to Its