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 $22.55 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: Please see screenshot for the rest of the question and instructions.
Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozema n, Montana. For its services, the company has always charged a at fee per hundred square feet of carpet cleaned. The current fee is $22.55 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 Pool Activity Measure Activity for the Year Cleaning carpets Square feet cleaned {lls} 12,500 hundred square feet Il'rawel to jobs Miles driven 186,000 miles Job support Number of jobs 2,100 jobs Other (organization-sustaining costs and idle capacity costs} \"one Not applicable The total cost of operating the company for the year is $368,000 which includes the following costs: IlIl'ages $ 149 , 0 00 Cleaning supplies 30, 0 00 Cleaning equipment depreciation 18, 0 00 Vehicle expenses 30, 000 Office expenses 63, 0 00 Pres ident ' s campens at ion T8 , 0 00 Total cost $ 368,000 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Travel Job Carpets to Jobs Support other Total llll'ages 73% 12% 0% 15% 100% Cleaning supplies 100% 0% 0% 0% 100% Cleaning equipment depreciation ?S% 0% 0% 25% 100% Vehicle expenses 0% 02% 0% 13% 100% Office expenses 0% 0% 5'\". 43% 100% President's compensation 0% 0% 27% ?3% 100% Job support consists of receiving calls from potential customers at the home office, schedulingjobs. 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 200 square foot carpet-cleaning job at the Flying N Ranch-a 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 $45.10 (200 square feet @ $22.55 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 Prepare the first-stage allocation of costs to the activity cost pools. Cleaning Travel to Job Support Other Total Carpets Jobs Wages CA 0 Cleaning supplies 0 Cleaning equipment depreciation 0 Vehicle expenses O Office expenses O President's compensation O Total cost $ 0 $ 0 $ o 0 $ O 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 jobRequired 1 Required 2 Required 3 Required 4 :The company recently completed a 200 square foot carpet-cleaning job at the Flying N Ranch-a 52-mile round-trip journey from the company's offices in Bozeman. Compute the cost of this job using the activity-based costing system. (Round your [intermediate calculations and final answer to 2 decimal places.) Cost of the jobRequired 1 Required 2 Required 3 Required 4 E The revenue from the Flying l'vi Ranch was $4519 {2 hundred square feet @ $22.55 per hundred square feet]. Calculate the customer margin earned on this job. (Negative customer margins should be Indicated with a minus sign. Round your intermediate calculations and nal answers to 2 decimal places.) _:|
