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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 $22.65 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, a simple system consisting of four activity cost pools seemed to be adequate. The activily cost pools and their activity measures appear below Activity Cost Pool Activity Measure Activity for the Year Cleaning carpets Square feet cleaned (00s Miles driven Number of jobs 14,500 hundred square feet Travel to jobs Job support Other (costs of idle capacity and 438,500 miles 2,000 jobs Not applicable The total cost of operating the company for the year is $349,000, which includes the following costs: Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses 150,000 6,000 33.000 56,000 81,000 Total cost $349,000 Resource consumption is distributed across the activities as follows Distribution of Resource Consumption Across Activities Cleaning Travel to Job Carpets 76% 100% 69% Jobs 15% 0% Support Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses Other 9% 0% 31% 16% 40% 68% tal 100% 100% 100% 100% 100% 100% 096 096 84% 0% 0% Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on. 1. Prepare the first-stage allocation of costs to the activity cost pools. Travel to Support Total Wages Cleaning supplies Vehicle expenses Office expenses Total cost 2. Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.) Activity Cost Pool Cleaning carpets Travel to jobs Job support Activity Rate per hundred square feet per mile per job 3. The company recently completed a 6 hundred square foot carpet-cleaning job at the Flying N ranch-a 56.00-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.) t of the
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