Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
image text in transcribed
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 feeks $22.65 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 doughter, 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 totai cost of operating the company for the year is $348,000 which includes the following costs: Resource consumption is distributed across the activities as follows: Job support consists of recelving calls from potential customers at the home office, scheduling jobs, biling, 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 5 -mile round-trip journey from the company's ofices in Boteman. Compule the cost of this job using the activity-based costing system. 4. The revenue from the Flying N Ranch was $90.60 (400 square feet 9$2.65 per hundred square feet). Calculote the customer margin earned on this job

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Leadership Style At PT Tekstil Bandung A Management Audit Investigation Following The Prolonged Economic Slowdown In Indonesia

Authors: Samuel P.D. Anantadjaya, Irma M. Nawangwulan

1st Edition

3659328979, 978-3659328978

More Books

Students also viewed these Accounting questions