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 $23.45 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 on 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-sustaining costs and idle capacity costs) Activity Measure Square feet cleaned (00) Miles driven Number of jobs None Activity for the Year 7,500 hundred square feet 130,000 miles 1,900 jobs Not applicable The total cost of operating the company for the year is $366,000 which includes the following costs: Wages Cleaning supplies Cleaning equipment depreciation $ 141,000 29,000 Vehicle expenses office expenses President's compensation Total cost 12,000 39,000 64,000 81,000 $ 366,000 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Wagest Cleaning supplies Cleaning equipment depreciation Vehicle expenses office expenses President's compensation Cleaning Travel to Job Carpets Jobs Support Other Total 798 116 ON 10% 100% 100% 0% ON 0% 100% 658 08 0% 356 100% ON 84 0% 161 100% 58 42 100% 336 674 100% Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on. < Prev 2 of 4 Next >