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 $23.35 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 (205) 15,000 hundred square feet Travel to jobs Miles driven 85,500 miles Job support Number of jobs 2,000 jobs Other (organization-sustaining costs and idle capacity costs) None Not applicable The total cost of operating the company for the year is $354,000 which includes the following costs: Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost $ 139,800 33,000 15,000 38,000 59,000 70,000 $ 354,000 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Travel Carpets to Jobs Wages 80% 11% Cleaning supplies 100% 0% Cleaning equipment depreciation 679 0% Vehicle expenses 82% Office expenses 0% 08 President's compensation 0% 0% Job Support 0% % 0% 09 599 25 Other 9% 8% 33% 18% 41% 75% Total 100% 100 100% 100% 100% 100% Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Travel Job Carpets to Jobs Wages Support 80 11% 84 Cleaning supplies 100% B% 84 Cleaning equipment depreciation 67 04 es Vehicle expenses 09 0% Office expenses 8% 09 594 President's compensation es 04 254 Other 9 8% 334 18% 414 759 Total 100 100% 100% 100 100% 100% 824 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 400 square foot carpet cleaning job at the Flying Nranch-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 Nranch was $93.40 (400 square feet o $23.35 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 The revenue from the Flying N ranch was $93.40 (4 hundred square feet $23.35 per hundred square feet), Calculate the customer margin earned on this job. (Round your intermediate calculations and final answers to 2 decimal places.) Customer margin $ 36.68
