Salieri Inc. 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 Cleaning Job support Client support Other. Total.. Total Cost $645,576 $129,546 $ 20,900 $110,000 $906,022 Total Activity 72,700 hours 5,400 jobs 760 clients Not applicable The "Other" activity cost pool consists of the costs of idle capacity and organization- sustaining costs. One particular client, the Rebroff 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 Required: a. Compute the activity rates (i.e., cost per unit of activity) for the activity cost pools. Round off all calculations to the nearest whole cent. b. Using the activity-based costing system, compute the customer margin for the Rebroff family. Round off all calculations to the nearest whole cent. c. 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 Rebroff family. Round off all calculations to the nearest whole cent.
Salieri Inc. 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 Cleaning Job support Client support Other. Total.. Total Cost $645,576 $129,546 $ 20,900 $110,000 $906,022 Total Activity 72,700 hours 5,400 jobs 760 clients Not applicable The "Other" activity cost pool consists of the costs of idle capacity and organization- sustaining costs. One particular client, the Rebroff 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 Required: a. Compute the activity rates (i.e., cost per unit of activity) for the activity cost pools. Round off all calculations to the nearest whole cent. b. Using the activity-based costing system, compute the customer margin for the Rebroff family. Round off all calculations to the nearest whole cent. c. 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 Rebroff family. Round off all calculations to the nearest whole cent.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
8
Transcribed Image Text:Salieri Inc. 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
Cleaning
Job support
Client support
Other.
Total....
Total Cost
$645,576
$129,546
$ 20,900
$110,000
$906,022
Total Activity
72,700 hours
5,400
jobs
760 clients
Not applicable
The "Other" activity cost pool consists of the costs of idle capacity and organization-
sustaining costs.
One particular client, the Rebroff 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
Required:
a. Compute the activity rates (i.e., cost per unit of activity) for the activity cost
pools. Round off all calculations to the nearest whole cent.
b. Using the activity-based costing system, compute the customer margin for the
Rebroff family. Round off all calculations to the nearest whole cent.
c. 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 Rebroff family. Round off all calculations to the nearest whole
cent.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education