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 $$23\mathrm{.}55$ 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$)$

$12,500$ hundred square feet Travel to jobs Miles driven $287,500$

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 $$359,000$ which includes

the following costs: Wages $ $144,000$ Cleaning supplies $28,000$

Cleaning equipment depreciation $8,000$ Vehicle expenses $39,000$

Office expenses $59,000$ President$$s compensation $81,000$ Total cost $

$359,000\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ 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 $73\%13\%0\%$

$14\%100\%$ Cleaning supplies $100\%0\%0\%0\%100\%$ Cleaning

equipment depreciation $71\%0\%0\%29\%100\%$ Vehicle expenses $0\%$

$81\%0\%19\%100\%$ Office expenses $0\%0\%63\%37\%100\%$

President$$s compensation $0\%0\%31\%69\%100\%$

$\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$ 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 $59-$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 $$47\mathrm{.}10(200$ square feet @ $$23\mathrm{.}55$ per hundred square

feet$).$ Calculate the customer margin earned on this job.