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
image text in transcribed
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 fee is $22.45 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 Cleaning carpets Travel to jobs Job Support Other organization-staining costs and Idle capacity costs) Activity Measure Square feet cleaned (0) Miles driven Number of jobs Activity for the Year 12.500 hundred square feet 84,000 miles 1,700 jobs None Not applicable The total cost of operating the company for the year is $363,000 which includes the following costs: Ways Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost $ 137,000 28,000 19,000 29.000 66,000 80.000 363.000 Resource consumption is distributed across the activities as follows: Job Support Other 135 Distribution of Resource Consumption across Activities Cleaning Travel Carpets to Jobs Wages 741 131 Cleaning supplies 1008 Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation 661 Total 1001 1008 1903 1001 1009 100 161 241 O 731 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 600 square foot carpet-cleaning job at the Flying N Ranch-a 53-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 $134.70 (600 square feet @ $22.45 per hundred square feet). Calculate the customer margin earned on this job. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Prepare the first stage allocation of costs to the activity cost pools. Cleaning Carpets Travel to Jobs Job Support Other Total Wugos Cleaning supplies Cleaning equipment depreciation Vehicle expenses Once expenses loooo President's compensation Total cost 0505 Required 2 > 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 600 square foot carpet-cleaning job at the Flying N Ranch-a 53-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 $134.70 (600 square feet $22.45 per hundred square feet). Calculate the customer margin earned on this job. 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 Job support por job por mide Required wired 3 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 600 square foot carpet-cleaning job at the Flying N Ranch-a 53-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 $134.70 (600 square feet a $22.45 per hundred square feet). Calculate the custo margin earned on this job. Complete this question by entering your answers in this tabs below. Required 1 Required 2 Required 3 Required 4 The company recently completed a 600 square foot carpet-cleaning job at the Flying N Ranch-a 53-mile round-trip journey from the company's offices in Bozeman Compute the cost of this job using the activity-based costing system. (Round your intermediate calculations and final answer to 2 decimal places.) Cost of the job Required 2 Required 4 > Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, a 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 600 square foot carpet-cleaning job at the Flying N Ranch-a 53-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 $134.70 (600 square feet @ $22.45 per hundred square feet). Calculate the custo margin earned on this job. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 The revenue from the Flying N Ranch was $134.70 (6 hundred square feet @ $22.45 per hundred square feet). Calculate the customer margin earned on this job. (Negative customer margins should be indicated with a minus sign. Round your intermediate calculations and final answers to 2 decimal places.) Customer margin ( Required 3

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

Financial Accounting Study Guide

Authors: Jerry J. Weygandt ,Donald E. Kieso ,Paul D. Kimmel

4th Edition

0471205117, 978-0471205111

More Books

Students also viewed these Accounting questions

Question

Evaluate the impact of unions on nurses and physicians.

Answered: 1 week ago

Question

Describe the impact of strikes on patient care.

Answered: 1 week ago

Question

Evaluate long-term care insurance.

Answered: 1 week ago