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Kenosha Winter Services is a small, family-owned snow-removal business. For its services, the company has always charged a flat fee per hundred square metres
Kenosha Winter Services is a small, family-owned snow-removal business. For its services, the company has always charged a flat fee per hundred square metres of snow removal. The current fee is $11.60 per hundred square metres. However, there is some question about whether the company is actually making any money on jobs for some customers-particularly those located on more remote properties that require considerable travel time. The owner's daughter, home from school for the summer, has suggested investigating this question using ABC. After some discussion, a simple system consisting of four activity cost pools seemed to be adequate. The activity cost pools and their activity measures appear below: Activity Cost Pool Snow removal Travel to jobs Job support Other (coats of idle capacity and organization- sustaining coats) Activity Measure Square metres cleaned (00s) Kilometres driven Number of jobs None The total cost of operating the company for the year is $397,500, which includes the following costs: Mages Supplies Snow removal equipment depreciation Vehicle expenses office expenses President's compensation Total cost $153,000 40,500 20,500 40,500 61,000 92,000 $397,500 Activity for the Year 36,065 hundred square metres 16,650 kilometres NA 500 jobs Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption across Activity Cost Pools Snow Travel to Removal Joba Job Support Other Total Wages 80% 206 06 10% 200 Supplies 100% ON ON 0% 100% Snow removal equipment depreciation 856 0% 0% 159 2006 Vehicle expenses 0% 651 0% 354 100% office expenses 10% ON 45K President's compensation 55 100% 10% ON 359 654 100%
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