-- Chapter 70 Saved 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 $12.70 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: Activity Cost Pool Activity Measure Activity for the Year Snow removal Square metres cleaned (Oos) 40,600 hundred square metres Travel to jobs Kilometres driven 28,520 kilometres Job support Number of jobs 160 jobs Other (costs of idle capacity and NA organization-sustaining costs)None The total cost of operating the company for the year is $495,000, which includes the following costs: Next - Chapter 7 0 Saved The total cost of operating the company for the year is $495,000, which includes the following costs: Wages Supplies Snow removal equipment depreciation Vehicle expenses Office expenses President's compensation $ 192,000 47,000 27,000 47,000 74,000 108,000 Total cost $495,000 - Chapter 7 0 Saved Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption across Activity Cost Pools Snow Travel Job Removal to Jobs Support Other 70% 20% 0% 10% 100% 0% 0% 0% Total 100% 100% 80% 0% 0% 20% 100% Wages Supplies Snow removal equipment depreciation Vehicle expenses Office expenses President's compensation 0% 0% 0% 70% 0% 0% 0% 40% 45% 30% 60% 55% 100% 100% 100% Job support consists of receiving calls from potential customers at the home scheduling jobs, billing, resolving issues, and so on. Required: 1. Prepare the first stage allocation of costs to the activity cost pools. Requirect 1. Prepare the first-stage allocation of costs to the activity cost pools. Snow Removal Travel to Jobs Job Support Other Total Wages Supplies Snow removal equipment depr. Vehicle expenses Office expenses President's compensation Total cost 2. Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.) 2. Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.) Activity Cost Pool Snow removal Activity Rate per hundred square metres per kilometre per job Travel to jobs Job support 3. The company recently completed a 4,900-square metre snow removal job at Hometown Hardware-a 89-kilometre round-trip journey from Kenosha's offices. Compute the cost of this job using the ABC system. (Round your answers to 2 decimal places.) ABC Cost Activity Cost Pool Snow removal Travel to jobs 4. The revenue from the Hometown Hardware job was $622.30 (4,900 square metres at $12.70 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 Product margin
