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 owners 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:

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 200 square foot carpet-cleaning job at the Flying N Rancha 52-mile round-trip journey from the companys offices in Bozeman. Compute the cost of this job using the activity-based costing system.

4. The revenue from the Flying N Ranch was $44.60 (200 square feet @ $22.30 per hundred square feet). Calculate the customer margin earned on this job.

Activity Cost Pool Cleaning carpets Travel to jobs Job support Other (organization-sustaining costs and idle capacity costs) Activity Measure Square feet cleaned (05) Miles driven Number of jobs Activity for the Year 8,500 hundred square feet 145,500 miles 2,000 jobs None Not applicable The total cost of operating the company for the year is $357,000 which includes the following costs: Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost $ 143,000 22,000 17,000 29,000 64,000 82,000 $ 357,000 Resource consumption is distributed across the activities as follows: 14% Distribution of Resource Consumption Across Activities Cleaning Travel Carpets to Jobs Wages 74% Cleaning supplies 100% 0% Cleaning equipment depreciation 67% 0% Vehicle expenses 0% 78% Office expenses 0% 0% President's compensation 0% 0% Job Support Other % 12% 0% 0% 0% 33% 0% 22% 61% 39% 29% 71% Total 100% 100% 100% 100% 100% 100%