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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 $23.45 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, a simple system consisting of four activity cost pools seemed to be adequate. The activity cost pools and their activity measures appear below: Activity Cost Pool Cleaning carpets Travel to jobs Job support Other (costs of idle capacity and organization-sustaining costs) Activity Measure Square feet cleaned (00s) Miles driven Number of jobs Activity for the Year 14,500 hundred square feet 166,500 miles 1,600 jobs None Not applicable The total cost of operating the company for the year is $359,000, which includes the following costs: Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation $ 140,000 31,000 13.000 30,000 68,000 77,000 Total cost $ 359,000 Resource consumption is distributed across the activities as follows: Job Support 0% Distribution of Resource Consumption Across Activities Cleaning Travel to Carpets Jobs Wages 72% 14% Cleaning supplies 100% 0% Cleaning equipment depreciation 71% 0% Vehicle expenses 0% 82% Office expenses 0% President's compensation 0% 0% 0% 0% 0% 64% 29% Other 14% 0% 29% 18% Total 100% 100% 100% 100% 100% 100% 0% 36% 71% 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. Job Cleaning Carpets Travel to Jobs Support Other Total Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost 2. Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.) Activity Rate Activity Cost Pool Cleaning carpets Travel to jobs Job support per hundred square feet per mile per job 3. The company recently completed a 8 hundred square foot carpet-cleaning job at the Flying N ranch- a 57.00-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 and final answers to 2 decimal places.) Cost of the job
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