Miljohn freelancing provides different 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 Consulting 368,364 36, 250 hours Bookkeeping 142,500 8,100 jobs Client support 37,620 680 clients Other 220,000 Not applicable   The “other” activity cost pool consists of the costs of idle capacity and organization-sustaining costs. One particular client, the Adams corporation, requested 31 jobs during the year that required a total of 24 hours of service. For this service the client as charged 1,750. Required: Compute the increase/decrease in margin assuming Miljohn Freelancing decides to use traditional costing system in which all cost are allocated to customer on the basis of number of jobs.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Miljohn freelancing provides different 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

Consulting

368,364

36, 250 hours

Bookkeeping

142,500

8,100 jobs

Client support

37,620

680 clients

Other

220,000

Not applicable

 

The “other” activity cost pool consists of the costs of idle capacity and organization-sustaining costs. One particular client, the Adams corporation, requested 31 jobs during the year that required a total of 24 hours of service. For this service the client as charged 1,750.

Required:
Compute the increase/decrease in margin assuming Miljohn Freelancing decides to use traditional costing system in which all cost are allocated to customer on the basis of number of jobs.

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