Sylvia's Housecleaning Service Provides Housecleaning Services to Its Clients The "Other" Activity Cost Pool Consists of the Costs of Company

Sylvia's Housecleaning Service 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:
$$\begin{array} { l r c } \text { Activity Cost Pool } & \text { Total Cost } & \text { Total Activity } \\\text { Clearing } & \$ 252,787 & 44,900 \text {hours} \\\text { Job support } & 73,758 & 5,706\text { jobs} \\\text { Client support } & 7,668 & \text { 270clients } \\\text { Other } &\underline{ 230,000 }& \text { Not applicable } \\\text { Total } &\underline{ \$ 564,213} &\end{array}$$
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
One particular client, the Layton family, requested 49 jobs during the year that required a total of 245 hours of housecleaning. For this service, the client was charged $2,500.
Required:
a. Compute the activity rates (i.e., cost per unit of activity) for the activity cost pools. Round all calculations to the nearest whole cent.
b. Using the activity-based costing system, compute the customer margin for the Layton family. Round 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 Layton family. Round all calculations to the nearest whole cent.

Correct Answer:

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a. The computation of the activity rates...

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