
Concept explainers
The Thornes 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 |
$274,170 |
48,100 hours |
Job support |
99,066 |
5,700 jobs |
Client support |
9,796 |
620 clients |
Other |
110,000 |
Not applicable |
Total |
$493,032 |
|
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
One particular client, the Lazzara family, requested 37 jobs during the year that required a total of 222 hours of housecleaning. For this service, the client was charged $2,350.
Required:
Using the activity-based costing system, compute the customer margin for the Lazzara family. Round off all calculations to the nearest whole cent.

Trending nowThis is a popular solution!
Step by stepSolved in 3 steps

- Your company uses an activity-based costing system for its overhead costs. Thefollowing data is from its activity-based costing system. Activity Cost Pools Activity Rate Construction ........... $35.50 Per DLH Office support....... $580.00 Per Order Customer Support........ $250.00 Per Customer Revenue related to job $35,000.00 Number of orders 5 Traceable costs........ $7,500 DLH used 635 What is customer margin for this client? (Round to the nearest dollar if necessary.) Group of answer choices $25,693 $1,808 $9,308 $2,058arrow_forwardanswer in text form please (without image), Note: .Every entry should have narration pleasearrow_forwardi need the answer quicklyarrow_forward
- Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT tickets Employees Department direct costs From: Service department costs IT HR Total IT $ 0 16 $ 152,000 Required: Allocate the service department costs using the reciprocal method. (Matrix algebra is not required because there are only two service departments.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. HR 1,525 0 $ 247,950 152,000 Answer is not complete. Cost Allocation To: IT HR 152,000 $ 247,950 Publishing 2,440 24 $ 431,000 $ 247,950 Publishing $ Binding 2,135 40 $ 392,500 0 Binding 0arrow_forwardPlease see picture below.arrow_forwardThe following is taken from Clausen Company's internal records of its factory with two operating departments. The cost driver for indirect labor is direct labor hours, and the cost driver for the remaining items is number of hours of machine use. Compute the total amount of rent and utilities allocated to Dept. 2 using activity-based costing. Direct LaborHours MachineHours Operating Dept. 1 864 9,300 Operating Dept. 2 2,016 6,200 Totals 2,880 15,500 Factory overhead costs Rent and utilities $ 20,700 Indirect labor 16,300 Depreciation – Equipment 13,000 Total factory overhead $ 50,000arrow_forward
- Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT tickets Employees Department direct costs. IT HR 0 16 1,525 0 Publishing 2,440 24 $ 152,000 $ 247,950 $ 431,000 Binding 2,135 40 $ 392,500 Woodstock Binding estimates that the variable costs in the IT Department total $112,500, and in the HR Department variable costs to $142,500. Avoidable fixed costs in the IT Department are $18,250. Required: If Woodstock Binding outsources the IT Department functions, what is the maximum it can pay an outside vendor without increasing total costs? Note: Do not round intermediate calculations. × Answer is complete but not entirely correct. Maximum…arrow_forwardRoca, Incorporated, manufactures and sells two products: Product M6 and Product X7. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Overhead Cost Activity Cost Pools Labor-related Production orders Order size Multiple Choice O $360,294 O $443.424 O $369,879 Activity Measures DLHs orders MHS O $249,264 $ 152,100 63,035 505,452 $ 720,587 The total overhead applied to Product X7 under activity-based costing is closest to: (Round your Intermediate calculations to 2 decimal places.) Expected Activity Product M6 Product X7 3,000 400 4,800 300 3,700 3,600 saved Total 7,800 700 7,300arrow_forwardNonearrow_forward
- Please provide answer in text (Without image)arrow_forwardSpeedy Auto Repairs uses a job-order costing system. The company's direct materials consist of replacement parts installed in customer vehicles, and its direct labor consists of the mechanics' hourly wages. Speedy's overhead costs include various items, such as the shop manager's salary, depreciation of equipment, utilities, insurance, and magazine subscriptions and refreshments for the waiting room. The company applies all of its overhead costs to jobs based on direct labor-hours. At the beginning of the year, it made the following estimates: Direct labor-hours required to support estimated output Fixed overhead cost Variable overhead cost per direct labor-hour 24,000 $ 288,000 $ 1.00 Required: 1. Compute the predetermined overhead rate. 2. During the year, Mr. Wilkes brought in his vehicle to replace his brakes, spark plugs, and tires. The following information was available with respect to his job: $ 615 $208 9 Direct materials Direct labor cost Direct labor-hours used Compute Mr.…arrow_forwardSpeedy Auto Repairs uses a job-order costing system. The company’s direct materials consist of replacement parts installed in customer vehicles, and its direct labor consists of the mechanics’ hourly wages. Speedy’s overhead costs include various items, such as the shop manager’s salary, depreciation of equipment, utilities, insurance, and magazine subscriptions and refreshments for the waiting room. The company applies all of its overhead costs to jobs based on direct labor-hours. At the beginning of the year, it made the following estimates: Direct labor-hours required to support estimated output 40,000 Fixed overhead cost $ 640,000 Variable overhead cost per direct labor-hour $ 1.00 Required: 1. Compute the predetermined overhead rate. 2. During the year, Mr. Wilkes brought in his vehicle to replace his brakes, spark plugs, and tires. The following information was available with respect to his job: Direct materials $ 707 Direct labor cost $ 230 Direct…arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





