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Gallatin Carpet Cleaning has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $12.50 per hundred square
Gallatin Carpet Cleaning has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $12.50 per hundred square feet. However, there is some question about whether the company is making a profit on jobs requiring considerable travel time. The owner's daughter suggested answering this question by designing an activity-based costing system using the information shown below: Activity Cost Pool Cleaning carpets Travel to jobs Activity Measure Square feet cleaned (00s) Miles driven Number of jobs Other (organization-sustaining costs and idle capacity costs) None Job support Activity for the Year 11,500 hundred square feet 278,000 miles 2,600 jobs Not applicable The total cost of operating the company for the year is $371,000 which includes the following costs: Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost $ 139,000 21,000 20,000 37,000 72,000 82,000 $ 371,000 She distributed these operating costs across her four activities as follows: Distribution of Resource Consumption Across Activities Cleaning Travel to Carpets Jobs Job Support Other Total Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation 78% 14% 0% 8% 100% 100% 096 096 096 100% 63% 0% 0% 37% 100% 0% 79% 0% 21% 100% 0% 0% 59% 41% 100% 096 096 28% 72% 100% 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 200-square-foot carpet-cleaning job at the Flying N Ranch-a 59-mile round-trip from the company's home office. Compute the cost of this job using the activity-based costing system. 4. The revenue from the Flying N Ranch was $25.00 (200 square feet @ $12.50 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. Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost Cleaning Carpets Travel to Jobs Job Support Other Total 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. Note: Round your answers to 2 decimal places. Activity Cost Pool Cleaning carpets Travel to jobs Job support Activity Rate per hundred square feet per mile per job < Required 1 Required 3 > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 The company recently completed a 200-square-foot carpet-cleaning job at the Flying N Ranch-a 59-mile round-trip from the company's home office. Compute the cost of this job using the activity-based costing system. Note: Round your intermediate calculations and final answer to 2 decimal places. Cost of the job < Required 2 Required 4 > 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 $25.00 (2 square feet @ $12.50 per hundred square feet). Calculate the customer margin earned on this job. Note: Negative customer margins should be indicated with a minus sign. Round your intermediate calculations and final answers to 2 decimal places. Customer margin < Required 3 Required 4 > Show less
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