5 Problem 7-20 Evaluating the Profitability of Services [LO7-2, LO7-3, LO7-4, LO7-5) 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 $28 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some 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 10 points articularly those located on eflook Activity Cost Pool Activity Measure Activity for the Year Square feet cleaned Miles driven Number of jobs None hundred square Cleaning carpets Travel to jobs Job support other (organization-sustaining costs and idle 20,000 feet 68,000 miles 2,080 jobs capacity costs) Not applicable The total cost of operating the company for the year is $430,000 which includes the following costs: 150,008 40,000 Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost 20,000 80,000 68,000 80,008 430,00e