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 $22.25 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 Activity Measure Activity for the Year Travel to jobs Square feet cleaned (09s) Job support Miles driven 8,500 hundred square feet 88, 508 miles Other (organization-sustaining costs and idle Number of jobs 2, 100 jobs capacity costs) None Not applicable The total cost of operating the company for the year is $344,000 which includes the following costs: Wages $ 135, 000 Cleaning supplies 30, 000 Cleaning equipment depreciation 14, 000 Vehicle expenses 32, 000 Office expenses 60, 000 President's compensation 73, 000 Total cost 344 , 000 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Travel Job Carpets to Jobs Support Other Total Wages 74% 14% 0% 12% 100% Cleaning supplies 100* 0% 100% Cleaning equipment depreciation 67% 0% 339 100% Vehicle expenses 78% 0% 2 286 100% Office expenses 51% 100% President's compensation 0% 27% 100% of 6 Next