Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed

image text in transcribed

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 $2275 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 cosung 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 capacity costs) Activity Measure Square feet cleaned (ees) Miles driven Number of Jobs Activity for the Year 12,000 hundred square feet 410,500 miles 1,990 Jobs None Not applicable The total cost of operating the company for the year is $373,000 which includes the following costs: $ 147,280 32,000 14,000 Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost 27. eee 68,000 85,000 5 373,000 Resource consumpton is distributed across the activities as follows: 71% Distribution of Resource Consumption Across Activities Cleaning Travel Carpets Lo Jobs Wages 14% Meaning supplies 100% 3% Cleaning equipient depreciation 78% BX Vehicle expenses 3% 81% Office expenses B% 28 President's compensation 6 s! Job Support 0% 0% 08 BA 64"K 28% other 15% 9% 38% 19% 36% 723 Total 108% 100% 100% 108% 108x 100% Job support consists of receiving calls from potential customers at the home office, scheduling Jobs, billing.resolving issues, and so on Required: deaning equipment depr Vehicle expenses office expenses President's compensation 02 B% 5% B1% DIX DX 0% 64% 19% 36% 72% 100% 100% 1997 28% 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 400 square foot carpet-ceaning 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 $9100 (400 square feet @ $2275 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 Carpets Travel to Jobs Job Support Other Total $ 0 0 0 Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation 0 0 0 Total cost S OS 0 S OS OS 0

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Quality Audits Are Fun Journal Notes Checklists Questions Observations Evidence Log

Authors: Just Visualize It, The Quality Guy

1st Edition

1726628981, 978-1726628983

More Books

Students also viewed these Accounting questions

Question

What role does an information system play in todays organizations?

Answered: 1 week ago

Question

1. Identify three approaches to culture.

Answered: 1 week ago

Question

2. Define communication.

Answered: 1 week ago

Question

4. Describe how cultural values influence communication.

Answered: 1 week ago