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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
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 $22.30 per hundred square feet. However. there is some question about whether the company is actually making any money on jobs for some customersparticularly 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 activitybased 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 {005) 14,666 hundred square Feet Travel to jobs Miles driven 352,666 miles Job support Number of jobs 1,?66 jobs Other (organizationsustaining costs and idle capacity costs) None Not applicable The total cost of operating the company for the year is $350,000 which includes the following costs: Wages $ 139,666 Cleaning supplies 31,666 Cleaning equipment depreciation 13,666 Vehicle expenses 31,666 Office expenses 61,666 President's compensation 75,666 Total cost $ 356,666 Resource consumption is distributed across the activities as follows: Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Travel to Carpets Jobs Job Support Other Total Wages 7996 15% 9% 6% 199% Cleaning supplies 199% 9% 9% 9% 199% Cleaning equipment depreciation 72% 9% 9% 28% 199% Vehicle expenses 9% 81% 9% 19% 199% Office expenses 9% 9% 64% 36% 199% President's compensation 8% 9% 3296 68% 199% Job support consists of receiving calls from potential customers at the home office, schedulingjobs, billing. resolving issues, and so on. Required: 1. Prepare the firststage 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 carpetcleaningjob at the Flying N Rancha 57mile roundtripjourney from the company's offices in Bozeman. Compute the cost ofthis job using the activitybased costing system. 4. The revenue from the Flying N Ranch was $89.20 (409 square feet @ $22.30 per hundred square feet). Calculate the customer margin earned on thisjob. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Prepare the firststage allocation of costs to the activity cost pools. Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost $ 0 $ 0 $ 0 $ 0 33 Required 2 ) 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 per mile Job support per job Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 The company recently completed a 400 square foot carpetcleaning job at the Flying N Rancha 5?mile roundtrip journey from the company's offices in Bozeman. Compute the cost of this job using the activitybased costing system. (Round your intermediate calculations and final answer to 2 decimal places.) ( Requiredz Required4 > 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 $89.20 {400 square feet @ $22.30 per hundred square feet). Calculate the customer margin earned on thisjob. (Negative customer margins should be indicated with a minus sign. Round your intermediate calculations and final answers to 2 decimal places.) ( Required 3
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