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 $22.15 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 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 PoolActivity MeasureActivity for the YearCleaning carpetsSquare feet cleaned (00s)14,000hundred square feetTravel to jobsMiles driven83,500milesJob supportNumber of jobs1,800jobsOther (organization-sustaining costs and idle capacity costs)NoneNot applicable

The total cost of operating the company for the year is $339,000 which includes the following costs:

Wages$143,000Cleaning supplies28,000Cleaning equipment depreciation6,000Vehicle expenses26,000Office expenses61,000President's compensation75,000Total cost$339,000

Resource consumption is distributed across the activities as follows:

Distribution of Resource Consumption Across ActivitiesCleaning CarpetsTravel to JobsJob SupportOtherTotalWages76%12%0%12%100%Cleaning supplies100%0%0%0%100%Cleaning equipment depreciation73%0%0%27%100%Vehicle expenses0%82%0%18%100%Office expenses0%0%56%44%100%President's compensation0%0%26%74%100%

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 N Rancha 52-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 $88.60 (400 square feet @ $22.15 per hundred square feet). Calculate the customer margin earned on this job.