he 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 P185,752 21,700 hours Job support 171,532 6,100 jobs Client support 15,124 760 clients Other 240,000 Not applicable Total P612,408 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 P1,170. Required: 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.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
The Kamienski Cleaning Brigade Company provides housecleaning services to its clients. The company uses an activity-based costing system for its
|
Activity Cost Pool |
Total Cost |
Total Activity |
||
|
Cleaning |
P185,752 |
21,700 |
hours |
|
|
Job support |
171,532 |
6,100 |
jobs |
|
|
Client support |
15,124 |
760 |
clients |
|
|
Other |
240,000 |
Not |
applicable |
|
|
Total |
P612,408 |
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 P1,170.
Required:
- 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.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
