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Gallatin Carpet Cleaning is a small, family - owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat
Gallatin Carpet Cleaning is a small, familyowned business operating out of Bozeman, Montana. For its services, the company has
always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $ per hundred square feet. However,
there is some question about whether the company is actually making any money on jobs for some customersparticularly those
located on remote ranches that require considerable travel time. The owner's daughter, home for the summer from college, has
suggested investigating this question using activitybased costing. After some discussion, she designed a simple system consisting of
four activity cost pools. The activity cost pools and their activity measures appear below:
The total cost of operating the company for the year is $ which includes the following costs:
Resource consumption is distributed across the activities as follows:
Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so
on
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