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Gailatin Carpet Cleaning is a smail, family-owned Business operating out of Eiozeman. Montana. For Its services, the company has always charged a flat fee per
Gailatin Carpet Cleaning is a smail, family-owned Business operating out of Eiozeman. Montana. For Its services, the company has always charged a flat fee per hundred square feet ofcarpet cleaned. The current fee is $22.89 per hundred square feet. However. there Is some question about whether the company Is actually making anyr money onjobs for some customersparticularly those located on 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.r cost pools. The activity cost pools and their activity measures appear below: Activity cost Pool Cleaning carpets Travel to jobs Job support other (organization-sustaining costs and idle capacity costs) None Activity Measure Square feet cleaned (99s) Miles driven Number of jobs Activity for the Year 9,599 hundred square feet 18?,599 miles 2,999 jobs Not applicable The total cost ofoperating the company for the year is $352,000 which Includes the following costs: Resource consumption Is distributed across the activities as follows: pages 5 1S,999 cleaning supplies 29,999 Cleaning equipment depreciation 14,999 Vehicle expenses 2?,999 Office expenses 59,999 President's compensation ??,999 Total cost $ 352,555 Distribution of Resource Consumption Across Activities cleaning Travel to Carpets Jobs wages ?1% 12% Cleaning supplies 199% 9% cleaning equipment depreciation ?2% 9% Vehicle expenses 9% 82% office expenses 9% 9% President's compensation 9% 9% Job Support 9% 9% 9% 8% 52% 25% other 13% 8% 23% 13% 33% 31% Total 199% 199% 199% 199% 199% 199% Job support consists of receiving calls from potential customers at the home office, schedulingjobs, billing, resolving Issues. and so 0 n 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. he company recently completed a 600 square foot carpet cleanlngjoo at the Flying N Rancha 5? mlle round- t-rlpjourney from the company's ofces In Eiozemah. Compute the cost of thisjob using the activity- based costing system. 4_ margin earned on thisjob. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 he revenue from the Flying N Ranch was $136. 80 {600 square feet LEI: $22. 80 per hundred square feet}. Calculate the customer \fRequired 1 Required 2 Required 3 Required 4 Compute the activity rates for the activity oust pools. [Round 1your answers to 2 decimai pieces.) Eleani'lg carpets _ per hundred square feel Travel to jobs Jul: support Complete this queson by enuering your answers in the labs below. Required 1 Required 2 Required 3 Required 4 The company recently completed a soc square foot carpetcleaning job at the Flying N Rancha 5?mile roundtrip journey from the company's ofces in Bozeman. Compute the cost of this. job using the activity-based costing system; (Round your intermediate calcu!aticns and nal answer to 2 decimal places.) _:| Complete this queslion by entering your answers in le labs below. Required 1 Required 2 Required 3 I Required 4 [ The revenue from the Flying N Ranch was $136.89 {EDD square feet @ $22.33 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.)
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