Andracki Housecleaning 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 $442,068 78,800 hours
- Job Support 52,801 1900 jobs
- Client Support 9,170 350 clients
- Other 110,000 Not applicable
- Total 614,039
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
One particular client, the Lason family, requested 46 jobs during the year that required a total of 92 hours of housecleaning. For this service, the client was charged $2,230.
Required:
a. Compute the activity rates 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 Lason 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 Lason family. Round off all calculations to the nearest whole cent.
2.Capid Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow:
• Sales are budgeted at $360,000 for November, $330,000 for December, and $320,000 for January.
• Collections are expected to be 56% in the month of sale, 42% in the month following the sale, and 2% uncollectible.
• The cost of goods sold is 70% of sales.
• The company purchases 40% of its merchandise in the month prior to the month of sale and 60% in the month of sale. Payment for merchandise is made in the month following the purchase.
• The November beginning balance in the accounts receivable account is $67,000.
• The November beginning balance in the accounts payable account is $217,000.
Required:
a. Prepare a Schedule of Expected Cash Collections for November and December.
b. Prepare a Merchandise Purchases Budget for November and December.
3.Deviney Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.65 direct labor-hours. The direct labor rate is $9.20 per direct labor-hour. The production budget calls for producing 6,600 units in July and 6,000 units in August. The company guarantees its direct labor workers a 40-hour paid work week. With the number of workers currently employed, that means that the company is committed to paying its direct labor work force for at least 5,600 hours in total each month even if there is not enough work to keep them busy.
Required: Construct the direct labor budget for the next two months.