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4. Kristine Roofing Solutions does the roofing for new houses constructed in and around Accra. It charges a flat rate of GHS25 per square feet
4. Kristine Roofing Solutions does the roofing for new houses constructed in and around Accra. It charges a flat rate of GHS25 per square feet of building roofed regardless of the location of the building. Management is wondering whether they are earning any positive margin on jobs that are located.jo more remote places that require a considerable travel time. A member of the management team suggested the use of activity based costing to investigate this issue. After days of deliberations, management came up with the following cost pools and activity measures Activity Cost Pool Activity Measure Total Activity Roofing buildings Square feet roofed 5,000,000 square feet Travel to jobs Kilometres driven 60,000 kilometres Job support Number of jobs Other An organisation sustaining activity Not applicable 500 jobs Overhead cost incurred in running the business for the year totalled GHS330,000, which consisted of the following: Salaries to supervisors and administrative staff 200,000 Depreciation of equipments and tools 20,000 Vehicle running expenses 50.000 Office expenses 15,000 Executive compensation 45,000 Resource consumption is distributed across activities as follows: Distribution of Resource Consumption Across Activity Roofing Buildings Travel to Job Other Total Jobs Support Salaries to supervisors and 60% 10% 100% admin staff Depreciation of equipments 70% 0% 0% 30% 100% and tools Vehicle running expenses 0% 90% 0% 10% 100% Offices expenses 0% 0% 70% 30% 100% Executive compensation 0% 0% 40% 60% 100% 20% 10% During the year, Kristiane Roofing executed a 5,000 square feet building-roofing job for Alhaji Mo. The crew that worked on the job drove 60 kilometres in round-trip from the company's office to the job site each day. The crew did the job over 16 days. Other data concerning the job follow. Cost of roofing materials used GHS80,000 Direct labour hours 0.1 hours per square feet Direct labour rate GHS6 per hour Required: 1) Prepare a report showing the first-stage allocations of overhead costs to the activity cost pools. 1) Compute the activity rates for the activity cost pools. iii) Prepare a report showing the overhead costs assigned to the Alhaji Mo Job. iv) Prepare a report showing the customer margin for the Alhaji Mo Job. Was the job profitable
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