Gallatin Carpet Cleaning is a small, family$-$owned 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 $$22\mathrm{.}70$ per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers$$particularly 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 activity$-$based 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:

Activity Cost Pool Activity Measure Activity for the Year

Cleaning carpets Square feet cleaned $(00$s$)11,500$ hundred square feet

Travel to jobs Miles driven $448,000$ miles

Job support Number of jobs $1,800$ jobs

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

The total cost of operating the company for the year is $$341,000$ which includes the following costs:

Wages $ $137,000$

Cleaning supplies $23,000$

Cleaning equipment depreciation $10,000$

Vehicle expenses $27,000$

Office expenses $65,000$

President$$s compensation $79,000$

Total cost $ $341,000$

Resource consumption is distributed across the activities as follows:

Distribution of Resource Consumption Across Activities

Cleaning Carpets Travel to Jobs Job Support Other Total

Wages $72\%13\%0\%15\%100\%$

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

Cleaning equipment depreciation $69\%0\%0\%31\%100\%$

Vehicle expenses $0\%76\%0\%24\%100\%$

Office expenses $0\%0\%63\%37\%100\%$

President$$s compensation $0\%0\%34\%66\%100\%$

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 $200$ square foot carpet$-$cleaning job at the Flying N Ranch$$a $51-$mile round$-$trip journey from the company$$s offices in Bozeman. Compute the cost of this job using the activity$-$based costing system.

$4.$ The revenue from the Flying N Ranch was $$45\mathrm{.}40(200$ square feet @ $$2$

Complete this question by entering your answers in the tabs below.

Required $1$Required $2$Required $3$Required $4$

Compute the activity rates for the activity cost pools. $($Round your answers to $2$ decimal places.$)$

Activity Cost Pool Activity Rate

Cleaning carpets per hundred square feet

Travel to jobs per mile

Job support per job$4$

References

always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $$22\mathrm{.}70$ per hundred square feet. However,

there is some question about whether the company is actually making any money on jobs for some customers$-$particularly 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 activity$-$based 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 $$341,000$ 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$.$