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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 $23.40 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 Cos) 14,000 hundred square feet Travel to Jobs Miles driven 242, 500 ailes Job support Number of jobs 1,900 Jobs Other (organizatior-sustaining costs and idle capacity costs) None Not applicable The total cost of operating the company for the year is $363,000 which includes the following costs Vacos Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost $ 138,000 27,000 10,000 40,000 70,000 78,000 $363,000 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Travel Carpets to Jobs Job Support Other Vages 793 13N Ox 8% Cleaning supplies 100N ON 0% 0% Cleaning equipment depreciation 70N ON ON 30% Vehicle expenses ON 75 ON 25% Office expenses ON ON 63% 37% President's compensation ON ON 32% 68% Total 100% 100% 100% 100% 100% 100% 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 53-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 $187.20 (800 square feet @ $23.40 per hundred square feet). Calculate the customer margin earned on this job. Required 1 Required 2 Required 3 Required 4 Other Total Prepare the first-stage allocation of costs to the activity cost pools. Cleaning Travel to Carpets Jobs Job Support Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost

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