Compute the customer margin for the anderson family

Assignment Help Managerial Accounting
Reference no: EM13336436

Retired Professor Housecleaning

Retired Professor 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...............

 $645,576

72,700

hours

 

Job support..........

$129,546

5,400

jobs

 

Client support.....

$ 20,900

760

clients

 

Other.....................

$110,000

 

 

Total......................

$906,022

 

 

The "Other" activity cost pool consists of the cost of idle capacity based on a normal capacity measure.

One particular client, the Anderson family, requested 31 jobs during the year that required a total of 62 hours of housecleaning. For this service, the client was charged $1,620

Required:

1) Compute the activity rates (i.e., cost per unit of activity) for all the activity cost pools.

2) Using the activity-based costing system, compute the customer margin for the Anderson family.

3) Assume the company decides instead to use a traditional costing system in which ALL costs are allocated to customers on the basis of cleaninghours. Compute the margin for the Anderson family.

4) The president of Retired Professor Housecleaning asks you to explain your decision about how you handled the cost of idle capacity in your calculations above. Explain your reasoning to the president.

5) The president also asks you about possible cost savings that could be realized by reducing the total number of jobs by 50. Since the activity level for jobs will decrease, the president says that the savings must be calculated by multiplying the decline in jobs times the activity rate for job support. What is your response to the president?

Reference no: EM13336436

Questions Cloud

Depict structural formula for allyl alcohol : Draw structural formula for allyl alcohol. Use stereo bonds ONLY if in your example you are asked to draw a particular stereochemistry.
What is the expected non-operating terminal cash flow : The total cost for the new capital totals $718,000 with installation costs of $5,000. Inventories will increase by 6,500, accounts recieveable will increase by 4,000 and accounts payable will increase by 3500.
Who make buying decisions for organizations : Who make buying decisions for organizations
How to calculate the annual production of carbon dioxide : Calculate the annual production of carbon dioxide in kg if there are 40 million cars in the US and each car covers a diastase of 5000 miles at a consumption rate of 20 mpg.
Compute the customer margin for the anderson family : Company decides instead to use a traditional costing system in which ALL costs are allocated to customers on the basis of cleaninghours. Compute the margin for the Anderson family and calculated by multiplying the decline in jobs times the activity..
What is the bouyant force exerted on the balloon : A balloon inflated with helium (density .2 kg/m^3). If the density of air is 1.3 kg/m^3, what is the bouyant force exerted on the balloon
What is the net present value-npv of the project : The upfron project costs are $900 million and ford's weighted average cost of capital is 9%. If the issuance costs for external fincances are $10 million what is the net present value (NPV) of the project
Insuring each of the regions separately why is that : Suppose the insurance company can also cover the NE and SW Regions under a single insurance contract rather than two separate policies. The total premium under the combined policy is less than the total cost (sum of the two premiums) for insuri..
What is the intensity of light incident on the retina : A 2.0-mW laser pointer has a beam diameter of 1.7 mm. When it is accidentally pointed at a person's eye, What is the intensity of light incident on the retina

Reviews

Write a Review

 

Managerial Accounting Questions & Answers

  Discuss meaning of the principle of financial accountability

Is the principle of financial accountability applicable to legal practices in Africa and if so, in what way and discuss the meaning of the principle of financial accountability?

  Mix of financial and nonfinancial measure

Find the right mix of financial and nonfinancial measure to perform multiple tasks and identify appropriate remedial actions to be taken when performance falls short.

  Calculating standard material cost

Bulkboy Fitness Equipment, Inc. was recently created to produce and sell its "Biception" arm machine. Bulkboy decided to use a standard cost system to record costs related to the production of this product.

  Prepare a suggested price list for the atlanta area

Prepare a suggested price list for the Atlanta area. Consider only one-separation rounds and two-separation rounds or ovals, and only the two sizes - Calculate the variable costs per thousand bottles for one- separation rounds, two- separation rou..

  Computing income elasticity of demand

Suppose you have the following hypothetical demand or sales function. Calculate the income elasticity of demand for product X when I= $1,500. How could we classify product X? Is product X a cyclical or noncyclical good?

  Fundamental managerial accounting concepts

Explain the effect of undercosting or overcosting on profitability. Explain ratio analysis and their purpose. Do you think that all of the ratio analysis is necessary, if not, please explain.

  Developing personal budget

Supposing you would like to purchase the new car next year, develop the personal budget for yourself or a friend for this year. Make sure to comp,rise a savings plan to save enough for the down payment, taxes, license, and insurance.

  Evaluate the comment by the accountant of har

Evaluate the comment by the accountant of HAR in respect of the deductibility of expenses and outgoings under Hong Kong salaries tax and profits tax.

  Public budget cycle

Write down in four-pages in which you describe The Public Budget Cycle in government agency of choice. Describe phases of budget cycle (preparation and submission, approval, execution and audit and evaluation) and how this relates to the entire or..

  Collegepak company-cost volume profit analysis

CollegePak Company produced and sold 60,000 units throughout the year just ended at an average price of $20 per unit. Variable manufacturing costs were $8 per unit, and variable marketing costs were $4 per unit sold.

  Explain why green made this comment

Explain why Green made this comment. What is wrong with her analysis - Sascha Green reanalyzes the data, this time comparing quarterly machinehours with quarterly maintenance expenditures.

  Budgets in managerial accounting-matthew gabon

Budgets in Managerial Accounting: Matthew Gabon, the sales manager of Office Furniture Solutions, prepared the following budget for 2008:

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd