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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

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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 hundred square feet of carpet cleaned. The current fee is $23.90 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 Travel to jobs Job support other (organization-sustaining costs and idle Activity Measure Square feet cleaned (00s) Miles driven Number of jobs Activity for the Year 6,500 feet 2,800 jobs Not applicable hundred square 176, 5e9 miles capacity costs) None ces 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 $ 142,888 29,000 12,000 29,800 60,00 85,00 $357,008 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Travel Job Carpets to Jobs Support other Total ex ex 100% 8% 30% 1e0% 73% 100% 12% 15% Hages Cleaning supplies Cleaning equipment depreciation 78% Prev 6 of 6 Next > Resource consumption is distributed across the activities as follows Distribution of Resource Consumption Across Activities Cleaning Travel to Jobs Job Carpets 73% Support Other 15% 0% 3e% 25% 42% 67% Total 108% 100% Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation 12% 0% 8% 8% 1 ee% 70% 8% 8% ex 0% 75% 8% 8% 58% 100% 100% 108% 100% 8% 8% 33% 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 800 square foot carpet-cleaning job at the Flying N Ranch-a 57-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 $191.20 (800 square feet a $2390 per hundred square feet) Calculate the customer margin earned on this job

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