Gallatin Carpet Cleaning has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $$13\mathrm{.}25$ per hundred square feet. However, there is some question about whether the company is making a profit on jobs requiring considerable travel time. The owner$$s daughter suggested answering this question by designing an activity$-$based costing system using the information shown below:

Activity Cost Pool Activity Measure Activity for the Year

Cleaning carpets Square feet cleaned $(00$s$)14,500$ hundred square feet

Travel to jobs Miles driven $173,000$ miles

Job support Number of jobs $2,300$ jobs

Other $($organization$-$sustaining costs and idle capacity costs$)$ None Not applicable

The total cost of operating the company for the year is $$370,000$ which includes the following costs:

Wages $ $144,000$

Cleaning supplies $23,000$

Cleaning equipment depreciation $17,000$

Vehicle expenses $39,000$

Office expenses $71,000$

President$$s compensation $76,000$

Total cost $ $370,000$

She distributed these operating costs across her four activities as follows:

Distribution of Resource Consumption Across Activities

Cleaning Carpets Travel to Jobs Job Support Other Total

Wages $77\%14\%0\%9\%100\%$

Cleaning supplies $100\%0\%0\%0\%100\%$

Cleaning equipment depreciation $62\%0\%0\%38\%100\%$

Vehicle expenses $0\%77\%0\%23\%100\%$

Office expenses $0\%0\%59\%41\%100\%$

President$$s compensation $0\%0\%25\%75\%100\%$

Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on$.$

Required:

Prepare the first$-$stage allocation of costs to the activity cost pools.

Compute the activity rates for the activity cost pools.

The company recently completed a $400-$square$-$foot carpet$-$cleaning job at the Flying N Ranch$$a $51-$mile round$-$trip from the company$$s home office. Compute the cost of this job using the activity$-$based costing system.

The revenue from the Flying N Ranch was $$53\mathrm{.}00(400$ square feet @ $$13\mathrm{.}25$ per hundred square feet$).$ Calculate the customer margin earned on this job.