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Kenosha Winter Services is a small, familyowned snowremoval business. For its services, the company has always charged a at fee per hundred square metres of
Kenosha Winter Services is a small, familyowned snowremoval business. For its services, the company has always charged a at fee per hundred square metres of snow removal. The current fee is $12.70 per hundred square metres. However, there is some question about whether the company is actually making any money on jobs for some customersparticularly 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 offour activity cost pools seemed to be adequate. The activity cost pools and their activity measures appear below: tctivityr Cost Pool tctivityr Measure tctivityr for the Year Snow removal Square metres cleaned {665) 43,666 hundred square metres Travel to jobs Kilometres driven 25,356 kilometres Job support Number of jobs 266 jobs Other (costs of idle capacity and organization-sustaining costs) Hone NA The total cost of operating the company for the year is $532500. which includes the following costs: Nages $267,666 Supplies 49,566 Snow removal equipment depreciation 29,566 Vehicle expenses 49,566 CI'F'Fice expenses ?9,666 President's compensation 118,666 Total cost 255323599 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption across Activity Cost Pools Snow Travel to Removal Jobs Job Support Other Total wages 78% 26% 6% 16% 160% Supplies 166% 6% 6% 6% 166% Snow removal equipment depreciation 86% 6% 6% 26% 166% Vehicle expenses 6% ?6% 6% 36% 166% Office expenses 6% 6% 46% 66% 166% President's compensation 6% 6% 45% 55% 166% 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. {Do not leave any empty spaces; input a O wherever it is required.) Wages Supplies Snow removal equipment depr. Vehicle expenses Ofce expenses President's compensation Total cost 2 Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.) Snow removal per hundred square metres Travel to jobs per kilo metre Job support 3. The company recently completed a 5,400-square-metre snow removal job at Hometown Hardware-a 94-kilometre round-trip journey from Kenosha's offices. Compute the cost of this job using the ABC system. (Round your answers to 2 decimal places.) Activity Cost Pool ABC Cost Snow removal Travel to jobs Job support Total 4. The revenue from the Hometown Hardware job was $685.80 (5,400 square metres at $12.70 per hundred square metres). Prepare a report showing the margin from this job. (Round your answers to 2 decimal places.) Sales Costs: Snow removal Travel to jobs Job support Product margin
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