chapter 7 question 3
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B 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 $23.15 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 summe 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 Activity Measure Activity for the Year Cleaning carpets Square foot cleaned (008) 9,000 hundred square feet Travel to jobs Miles driven 277.000 miles Job support Number of jobs 1,700 Jobs Other (organization-sustaining costs and Idle capacity costs) None Not applicable The total cost of operating the company for the year is $366,000 which includes the following costs: Wages cleaning supplies Cleaning equipment depreciation Vehicle expenses ortice expenses President's compensation Total cost $ 142,000 26,000 19,000 29,000 65,000 85,000 $366,000 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Canina Pavel Check my work 3 Distribution of Resource Consumption Acrons Activities Cleaning Travel Carpetu to Jobs Wages 794 114 cleaning supplies 1000 Cleaning equipment depreciation 720 ou Vehicle expenses 08 845 Office expenses Os 0 President's compensation 00 ou 08 Job Support 08 08 00 0 571 288 Other 100 05 280 16 438 720 Total 1000 1000 100 1000 1001 1000 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 800 square foot carpet-cleaning job at the Flying N Ranch-a 54-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 $185.20 (800 square feet a $23.15 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 Prepare the first stage allocation of costs to the activity cost pools: Cleaning Travel to Mc 3 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 Other Total Prepare the first-stage allocation of costs to the activity cost pools. Cleaning Travel to Job Support Carpets Jobs Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost Required 1 Required 2 > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.) Activity Cost Pool Activity Rate Cleaning carpets per hundred square feet Travel to jobs per mile Job support per job C 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 800 square foot carpet-cleaning job at the Flying N Ranch-a 54-mile rc 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 $185.20 (800 square feet @ $23.15 per hundred square feet). Cal 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 800 square foot carpet-cleaning job at the Flying N Ranch-a 54-mile round-trip from the company's offices in Bozeman Compute the cost of this job using the activity-based costing system. (Rou Intermediate calculations and final answer to 2 decimal places.) Cost of the job 4. The revenue from the Flying N Ranch was $185.20 (800 square feet 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 revenue from the Flying N Ranch was $185.20 (8 hundred square feet @ $23.15 per hundred square feet). Calculate the customer margin earned on this job. (Negative customer margins should be indicated with a minus sign. Round your Intermediate calculations and final answers to 2 decimal places.) Customer margin
