Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

5 Kenosha Winter Services is a small, family-owned snow-removal business. For its services, the company has always charged a flat fee per hundred square metres

image text in transcribedimage text in transcribedimage text in transcribed
image text in transcribedimage text in transcribedimage text in transcribed
5 Kenosha Winter Services is a small, family-owned snow-removal business. For its services, the company has always charged a flat fee per hundred square metres of snow removal. The current fee is $11.55 per hundred square metres. However, there is some question about whether the company is actually making any money on jobs for some customers-particularly those located on more remote properties that require considerable travel time. The owner's daughter, home from school for the summer, has suggested investigating this question using ABC. After some discussion, a simple system consisting of four activity cost pools seemed to be adequate. The activity cost pools and their activity measures appear below: 15 points Activity Cost Pool Activity Measure Activity for the Year Snow removal Square metres cleaned (00s) 40, 720 hundred square metres 02:36:53 Travel to jobs Kilometres driven 20, 000 kilometres Job support Number of jobs 250 jobs Other (costs of idle capacity and organization- sustaining costs ) None NA Book The total cost of operating the company for the year is $450,000, which includes the following costs: Wages $174, 000 Supplies 44, 000 Snow removal equipment depreciation 24 , 000 Vehicle expenses 44, 000 office expenses 68, 000 President's compensation 96,000 Total cost $450, 000 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption across Activity Cost Pools Snow Travel to Job Removal Jobs Support Other Total Wages 808 108 10% 100% Supplies 1008 100% Snow removal equipment depreciation 858 15% 100% Vehicle expenses 658 35% 100% office expenses 458 55% 100% President's compensation 08 358 65% 100% Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on.02:36:38 Job support consists of receiving calls from potential customers at the home office, scheduling jobs, on. Required. eBook 1. Prepare the first-stage allocation of costs to the activity cost pools. (Do not leave any empty spaces; input a 0 wherever it is required.) Snow Travel to Job Support Other Total Removal Jobs Wages $ Supplies 0 Snow removal equipment depr. Vehicle expenses 0 Office expenses O O President's compensation Total cost $ o $ o $ o $ $ 0 2. Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.) Activity Cost Pool Activity Rate Snow removal per hundred square metres Travel to jobs per kilometre Job support per job points 3. The company recently completed a 4,300-square-metre snow removal job at Hometown Hardware-a 83-kilometre round-trip 02:36:27 journey from Kenosha's offices. Compute the cost of this job using the ABC system. (Round your answers to 2 decimal places.) Activity Cost Pool ABC Cost Snow removal eBook Travel to jobs Job support Total $ 0.00 4. The revenue from the Hometown Hardware job was $496.65 (4,300 square metres at $11.55 per hundred square metres). Prepare a report showing the margin from this job. (Round your answers to 2 decimal places.) Sales Costs: Snow removal Travel to jobs Job support 0.00 Product margin $ 0.00 5. This part of the question is not part of your Connect assignment. 6. This part of the question is not part of your Connect assignment.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Horngrens Accounting

Authors: Tracie Miller Nobles, Brenda Mattison, Ella Mae Matsumura, Carol A. Meissner, Jo Ann Johnston, Peter R. Norwood

11th Canadian Edition Volume 2

0135359783, 978-0135359785

More Books

Students also viewed these Accounting questions