Acc 216 ch 8

Acc 216 ch 8 - of housecleaning. For this service, the...

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Michael Cavalli Acc 216 Thompson-Abbot ACC 216 Quiz “Chapter #8 Activity-Based Costing: A Tool to Aid Decision Making” 1. In what fundamental ways does activity-based costing differ from traditional costing methods such as those described in Chapters 2 and 3? Traditional is to provide data for external financial reports Activity-based is designed for internal decision making 2. ABC Housecleaning provides housecleaning services to its clients. The company uses an activity- based costing system for overhead costs. The company has provided the following data from its activity- based costing system. Activity Cost Pool Total Cost Total Activity Cleaning $263,784 34,800 hours Job Support 145,180 7,000 jobs Client Support 4,774 220 clients Other 170,000 Not Applicable Total $583,738 The “Other” activity cost pool consists of the costs of idle capacity and organization-sustaining costs. On particular client, the Stewart family, requested 45 jobs during the year that required a total of 90 hours
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Unformatted text preview: of housecleaning. For this service, the client was charged $2,000. Part 1: Compute the activity rates for the activity cost pools. (cost per unit of activity) Cleaning $7.58 Job Support $20.74 Client Support $ 21.70 Other N/A Part 2: Using the ABC system, compute the customer margin for the Stewart family. Sales $2000 Costs: Cleaning $341.10 Job Support $933.30 Client Support $ 21.70 Total $ 1296.1 Customer Margin $703.9 Part 3: Assume the company decides 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 Stewart Family. Sales $2000 Costs: Cleaning $682.20 Job Support $1866.60 Client Support $ 21.70 Total $ 2570.50 Customer Margin ($ 570.5)...
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This note was uploaded on 04/27/2010 for the course ACCT 215 taught by Professor Thompsonabbot during the Spring '10 term at Marshall.

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Acc 216 ch 8 - of housecleaning. For this service, the...

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