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Gallatin Carpet Cleaning is a small, family-owned business opersting out of Bozeman, Montans. For its services, the company has elways charged a flat fee per
Gallatin Carpet Cleaning is a small, family-owned business opersting out of Bozeman, Montans. For its services, the company has elways charged a flat fee per hundred square feet of carpet cleaned. The current fee is $22.90 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 locsted on remote ranches that require considerable travel time. The owner's doughter, home for the summer from college, has suggested investigating this question using ectivity-bssed costing. After some discussion, she designed a simple system consisting of four activity cost pools. The sctivity cost pools and their activity messures appear below: Activity Cost Cleaning carpets Travel to jobs ob support Other (organization-sustaining costs and idle square feet cleaned (88s) Miles driven ,eee hundred square fect 2.28e ls 2,10e jobs 257,se riles Number of jobs capacity costs) Not applicable The total cost of opersting the compsny for the yesr is $382000 which includes the following costs: Cleaning supplics Cleaning equiprent depreciation Vchicle expenscs Office expenses President's corpensation Total cost 34,808 19,80e 37,8ee 64,80e 79,8ae $ 382,eee Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Travel Carpets to Jobs Job 78% Cleaning supplics Cleaning equipment depreciation Vchicle cxpcnses Dffice expenscs President's compensation 75% 25% 76% 75% Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so 1. Prepsre the first-stage allocation of costs to the activity cost pools. 2. Compute the activity rates for the sctivity cost pools. 3. The company recently completed200 square foot carpet-cleaning joo ot the Flying N Ranch-d 55-mile round-trip journey from the company's offices in Bozeman. Compute the cost of this job using the activity-bssed costing system, . The revenue from the Flying N Ranch was $45.80 (200 squsre feet$2290 per hundred squsre feet). Celculate 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. Jobs Job Support Other Cleaning supplies Cleaning equipment Vehidle expenses Office expenses Total cost
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