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 600 square foot carpet-cleaning job at the Flying N Rancha 53-mile round-trip journey from the companys offices in Bozeman. Compute the cost of this job using the activity-based costing system.
4. The revenue from the Flying N Ranch was $137.40 (600 square feet @ $22.90 per hundred square feet). Calculate the customer margin earned on this job.

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 $22.90 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 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 Measure Activity Cost Pool Cleaning carpets Square feet cleaned (00s) Miles driven Activity for the Year 7,000 hundred square feet 104,500 miles 2,000 jobs Travel to jobs Job support Number of jobs Other (organization-sustaining costs and idle capacity costs) None Not applicable The total cost of operating the company for the year is $359,000 which includes the following costs: Wages $ 140,000 Cleaning supplies 29,000 Cleaning equipment depreciation 19,000 Vehicle expenses 39,000 office expenses 57,000 President's compensation 75,000 Total cost $ 359,000 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Travel to Carpets Other Total Jobs 11% Wages 75% 14% 100% Cleaning supplies 100% 0% 0% 100% Cleaning equipment depreciation 71% 0% 29% 100% Vehicle expenses 0% 84% 16% 100% office expenses 0% 0% 42% 100% President's compensation 0% 0% 68% 100% Job Support ARRRRRE