Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a fiat fee per hundred square feet of carpet cleaned. The current fee is $24.05 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 Activity Measure Activity for the Year Cleaning carpets Square feet cleaned (05) 12,500 hundred square feet Travel to jobs Miles driven 294,500 miles Job support Number of jobs 1,900 jobs other (organization-sustaining costs and idle capacity costs) None Not applicable The total cost of operating the company for the year is $356,000 which includes the following costs: Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost $ 149,000 22,000 8,000 35,000 61,000 B1,000 $ 356,090 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Travel Carpets to Jobs Wages 765 134 Cleaning supplies 100% 09 Cleaning equipment depreciation 715 ON Vehicle expenses 798 Office expenses 09 09 President's compensation 04 ON Job Support 0 09 2 24 56 314 Other 118 09 299 21% 44% 694 Total 100% 100 180 100 100 1009 715 Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation 04 88 79% 05 es 04 56% 315 298 214 44% 695 100% 1085 1004 100% BY 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 Ranch-a 58-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 $48.10 (200 square feet @ $24.05 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 Total cost 0 0 $ 0 $ 0 S 0 0 0 $ 0 $
