iese jobs. yest? Be specific. TY-BASED COSTING AND JOB-ORDER COSTS. Ajax Pool a
ID: 2334643 • Letter: I
Question
iese jobs. yest? Be specific. TY-BASED COSTING AND JOB-ORDER COSTS. Ajax Pool a wide range of pool maintenance in New England. The company has five vans a one repair person, while others contain five workers for ing pools, which is very labor-intensive. There are also that is needed for the different kinds of jobs. Right now, Ajax charges materials directly to a job, and then adds a charge based on direct labor hours to account for the rest of the costs of running the business. Ajax adds 35% profit onto every job because the season is short, so the work that is done has to support the company during the lean winter months. Recently, Ajax has been losing customers to a new competitor in town, Swim Lanes. Tom Aaron, the owner of Ajax, has asked you to help him complete an activity-based analysis of his company to see if he can figure out why he is losing most of his repair business. The nonmaterial costs for running the business are $1,650,000 per year. There are direct labor hours expended each season. Tom wants you to look at three specific jobs to help him figure out what is happening. You work for a week and develop the following information on Tom's operations and three recent jobs. Services does and repair jobs over the course of a swimming season nd five work crews. Some crews consist of such things as opening and clos- various machines and support work 50,000 Ajax Pool Care Driver Frequency Cost of Activity Driver Direct labor hours Machine hours Jobs Tests made Orders taken Invoices mailed Activity Direct labor Vacuuming Set-up Testing Customer service Invoicing Total 50,000 2,000 5,000 5,000 1,200 2,400 $1,250,000 $62,000 $200,000 $60,000 $30,000 $48,000 $1,650,000 Ajax Pool Care Pool Cleaning Pool Opening $350 15 Pump Repair $1,000 40 $50 Activity Materials Direct labor hoursExplanation / Answer
a)
b)
c)
d)
e)
g)
Comparision suggest ABC is better as it allocates the cost based on the Activity pool of and which also helps in finding right cost of each product/service to take decisions.
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Overhead Cost $ 400,000 Direct Labour Hour 50,000 Overhead Rate $ 8.00 Direct Labour Cost $ 1,250,000 Direct Labour Hour 50,000 Direct Labour Rate 25.00Related Questions
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