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Kenosha Winter Services is a small, family-owned snow-removal business. For its services, the company has always charged a at fee per hundred square metres of
Kenosha Winter Services is a small, family-owned snow-removal business. For its services, the company has always charged a at fee per hundred square metres of snow removal. The current fee is $10.25 per hundred square metres. However, there is some question about whether the company is actually making any money onjobs 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 of four activity cost pools seemed to be adequate. The activity cost pools and their activity measures appear below: Activity Cast Pool Activity Measure Activity for the Year Snow removal Square metres cleaned (005] 53,750 hundred square metres Travel to jobs Kilometres driven 30,040 kilometres Job support Number of jobs 250 jobs Other (costs of idle capacity and organization- sustaininq costs] Hone NA The total cost of operating the company for the year is $525,000. which includes the following costs: Wages $204,000 Supplies 49,000 Snow removal equipment depreciation 29,000 Vehicle expenses 49,000 Office expenses 78,000 President's compensation 116,000 Total cost $525,000 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption across Activity Cost Pools Snow Travel to Job Removal Jobs Support Other Total Wages 70% 20% 108 100% Supplies 100% 0% 100% Snow removal equipment depreciation 80% 0% 208 100% Vehicle expenses 70% 0% 308 1008 Office expenses 40% 60% 100% President's compensation 0% 45% 550 100% 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. (Do not leave any empty spaces; input a 0 wherever it is required.) Snow Travel to Total Removal Jobs Job Support Other Wages $ Supplies 0 Snow removal equipment depr. 0 Vehicle expenses O O Office expenses President's compensation O Total cost $ 0 $ $ 0 $ 0 $ O 2. Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.) Activity Cost Pool Activity Rate Snow removal per hundred square metres Travel to jobs per kilometre Job support per job3. The company:r recently completed a 5.300-square-metre snow removal job at Hometown Hardwarea 93-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.) Snow removal Total $ 0.00 4. The revenue from the Hometown Hardwarejob was $543.25 [5300 square metres at $10.25 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 0.00 Product margin $ 0.00
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