Gallatin Carpet Cleaning has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $$12\mathrm{.}40$ per hundred square feet. However, there is some question about whether the company is making a profit on jobs requiring considerable travel time. The owner$$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$)8,000$ hundred square feet 

 

 Travel to jobs Miles driven $344,000$ miles 

 

 Job support Number of jobs $2,700$ jobs 

 

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

 

 The total cost of operating the company for the year is $$362,000$ which includes the following costs: 

 

Wages $ $137,000$

Cleaning supplies $20,000$

Cleaning equipment depreciation $19,000$

Vehicle expenses $35,000$

Office expenses $69,000$

President$\mathrm{â??}$s compensation $82,000$

Total cost $ $362,000$

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 $76\%13\%0\%11\%100\%$

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

Cleaning equipment depreciation $65\%0\%0\%35\%100\%$

Vehicle expenses $0\%78\%0\%22\%100\%$

Office expenses $0\%0\%61\%39\%100\%$

 

 President$$s compensation $0\%0\%32\%68\%100\%$ 

 

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 $600-$square$-$foot carpet$-$cleaning job at the Flying N Ranch$\mathrm{â??}$a $59-$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 $$74\mathrm{.}40(600$ square feet @ $$12\mathrm{.}40$ per hundred square feet$).$ Calculate the customer margin earned on this job.