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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 feet.
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: The total cost of operating the company for the year is $362,000 which includes the following costs: She distributed these operating costs across her four activities as follows: 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 400-square-foot carpet-cleaning job at the Flying N Ranch-a 60-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 $50.00 (400 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. Prepare the first-stage allocation of costs to the activity cost pools
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