Gallatin Carpet Cleaning has always charged a flat fee per hundred square feet of carpet cleaned....
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Gallatin Carpet Cleaning has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $12.70 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 Job support Other (organization-sustaining costs and idle capacity costs) Activity Measure Square feet cleaned (00s) Miles driven Number of jobs None Activity for the Year 10,000 hundred square feet 394,000 miles 2,500 jobs Not applicable The total cost of operating the company for the year is $344,000 which includes the following costs: Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost $ 139,000 20,000 17,000 28,000 66,000 74,000 $ 344,000 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 74% 16% 0% 10% 100% 100% 0% 0% 62% 0% 995 0% 100% 0% 38% 100% 0% 75% 0% 25% 100% 0% 0% 57% 43% 100% 0% 0% 35% 65% 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 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. 4. The revenue from the Flying N Ranch was $50.80 (400 square feet @ $12.70 per hundred square feet). Calculate the customer margin earned on this job. Gallatin Carpet Cleaning has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $12.70 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 Job support Other (organization-sustaining costs and idle capacity costs) Activity Measure Square feet cleaned (00s) Miles driven Number of jobs None Activity for the Year 10,000 hundred square feet 394,000 miles 2,500 jobs Not applicable The total cost of operating the company for the year is $344,000 which includes the following costs: Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost $ 139,000 20,000 17,000 28,000 66,000 74,000 $ 344,000 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 74% 16% 0% 10% 100% 100% 0% 0% 62% 0% 995 0% 100% 0% 38% 100% 0% 75% 0% 25% 100% 0% 0% 57% 43% 100% 0% 0% 35% 65% 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 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. 4. The revenue from the Flying N Ranch was $50.80 (400 square feet @ $12.70 per hundred square feet). Calculate the customer margin earned on this job.
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Answer rating: 100% (QA)
Answer 1 Firststage allocation of costs to the activity cost pools To allocate the costs to the activity cost pools we need to use the distribution pe... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Posted Date:
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