The Kamienski 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.
|
|
Activity Cost Pool
|
Total Cost
|
Total Activity
|
|
|
Cleaning.................
|
$185,752
|
21,700
|
hours
|
|
|
Job support.............
|
171,532
|
6,100
|
jobs
|
|
|
Client support........
|
15,124
|
760
|
clients
|
|
|
Other......................
|
240,000
|
Not
|
applicable
|
|
|
Total.......................
|
$612,408
|
|
|
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
One particular client, the Whiddon family, requested 15 jobs during the year that required a total of 60 hours of housecleaning. For this service, the client was charged $1,170.
Required:
a. Using the activity-based costing system, compute the customer margin for the Whiddon 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 Whiddon family. Round off all calculations to the nearest whole cent.