Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services,...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $23.50 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers-particularly those located on remote ranches that require considerable travel time. The owner's daughter, home for the summer from college, has suggested Investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below: Activity Cost Pool Cleaning carpets Travel to jobs Job support Other (organization-sustaining costs and idle capacity costs) Activity Measure Square feet cleaned (00s) Miles driven Number of jobs None Activity for the Year 10,000 hundred square feet 388,500 miles 1,700 jobs Not applicable The total cost of operating the company for the year is $369,000 which includes the following costs: Wages Cleaning supplies. Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation $ 140,000 34,000 8,000 39,000 66,000 82,000 $ 369,000 Total cost Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Carpets Travel to Jobs Job Support Other Total Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation 74% 100 16% 100% 100% 0% 100% 71% 29% 100% 79% 0% 21% 100% 61% 39% 100% ex 80% 30% 70% 100% Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on. Required: 1. Prepare the first-stage allocation of costs to the activity cost pools. 2. Compute the activity rates for the activity cost pools. 3. The company recently completed a 600 square foot carpet-cleaning job at the Flying N Ranch-a 58-mile round-trip journey from the company's offices in Bozeman. Compute the cost of this job using the activity-based costing system. 4. The revenue from the Flying N Ranch was $141.00 (600 square feet @ $23.50 per hundred square feet). Calculate the customer margin earned on this job. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 The company recently completed a 600 square foot carpet-cleaning job at the Flying N Ranch-a 58-mile round-trip journey from the company's offices in Bozeman. Compute the cost of this job using the activity-based costing system. Note: Round your intermediate calculations and final answer to 2 decimal places. Cost of the job < Required 2 Required 4 > Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $23.50 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers-particularly those located on remote ranches that require considerable travel time. The owner's daughter, home for the summer from college, has suggested Investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below: Activity Cost Pool Cleaning carpets Travel to jobs Job support Other (organization-sustaining costs and idle capacity costs) Activity Measure Square feet cleaned (00s) Miles driven Number of jobs None Activity for the Year 10,000 hundred square feet 388,500 miles 1,700 jobs Not applicable The total cost of operating the company for the year is $369,000 which includes the following costs: Wages Cleaning supplies. Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation $ 140,000 34,000 8,000 39,000 66,000 82,000 $ 369,000 Total cost Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Carpets Travel to Jobs Job Support Other Total Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation 74% 100 16% 100% 100% 0% 100% 71% 29% 100% 79% 0% 21% 100% 61% 39% 100% ex 80% 30% 70% 100% Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on. Required: 1. Prepare the first-stage allocation of costs to the activity cost pools. 2. Compute the activity rates for the activity cost pools. 3. The company recently completed a 600 square foot carpet-cleaning job at the Flying N Ranch-a 58-mile round-trip journey from the company's offices in Bozeman. Compute the cost of this job using the activity-based costing system. 4. The revenue from the Flying N Ranch was $141.00 (600 square feet @ $23.50 per hundred square feet). Calculate the customer margin earned on this job. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 The company recently completed a 600 square foot carpet-cleaning job at the Flying N Ranch-a 58-mile round-trip journey from the company's offices in Bozeman. Compute the cost of this job using the activity-based costing system. Note: Round your intermediate calculations and final answer to 2 decimal places. Cost of the job < Required 2 Required 4 >
Expert Answer:
Answer rating: 100% (QA)
Required 1 Prepare the firststage allocation of costs to the activity cost pools To allocate the tot... View the full answer
Posted Date:
Students also viewed these accounting questions
-
ACME Manufacturing Company has provided the following data concerning its most recent month of operations: units in beginning inventory 0 units produced 7,300 units sold 6,800 units in ending...
-
A company has determined that its optimal capital structure consists of 40% debt and 60% equity. Assume the firm will not have enough retained earnings to fund the equity portion of its capital...
-
jeremy turned 7 2 on june 1 1 2 0 2 3
-
Private carriage is more important in the motor carrier segment of our transportation industry than any of the other four major modal segments. What factors have contributed to private carriage...
-
What are the most promising steps that Lang can take to grow her business? What are the least promising?
-
Wild geese are known for their lack of manners. One goose is flying northward at a level altitude of = 30.0 m above a north-south highway, when it sees a car ahead in the distance moving in the...
-
The United States government measures many different things. For each of the following, indicate whether the measurement meets the normal goals of a measurement system: A. The Weather Service reports...
-
The data in the table below represent time study observations for a woodworking operation. a. Based on the observations, determine the standard time for the operation, assuming an allowance of 15...
-
Make a scatter plot for the given data. Use the scatter plot to describe whether or not the variables appear to be related. X 8 6 15 4 10 7 y 17 9 5 8 11 17 14 OA. 22 -10 21 -95 The variables appear...
-
Unused Variable The function assert _ equal was given a definition on line 1 , ?but was never used after that. THistory from cisc 1 0 8 ?import assert _ equal 2 def can _ drink ( age , ?has _ license...
-
How to develop a litigation strategy?
-
How to determine in which venue to file the lawsuit?
-
What is the difference between expenses and cash flow?
-
What the differences are between federal and state court jurisdiction?
-
Why do recurring revenue and commission-based firms frequently experience losses during periods of rapid sales growth?
-
Questions (41)-(46): File distribution problem In the file distribution system, assume that there are one server and N peers. Denote the upload rate of the server by us, the upload rate of the ith...
-
Explain why it is not wise to accept a null hypothesis.
-
Following from Question 4, if the debt instrument was included in the balance sheet at fair value through profit or loss this would mean that a profit would be recognised in the income statement....
-
Disclosure of the fair values of financial instruments (as required by FRS 13 in the UK) is better than measuring them at fair values in the financial statements (as is often required by IAS 39)...
-
Many groups have treasury policies that use hedging of net positions. They would look at their group-wide exposure in, e.g. foreign currency and then take forward contracts to cover the position....
Study smarter with the SolutionInn App