Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
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 $12.80 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 Activity Measure Activity for the Year Snow removal Square metres cleaned (008) 41,800 hundred square metres Travel to jobs Kilometres driven 24,400 kilometres Job support Number of jobs 200 jobs Other (costs of idle capacity and organization- sustaining costs) None NA The total cost of operating the company for the year is $510,000, which includes the following costs: Wages Supplies Snow removal equipment depreciation Vehicle expenses office expenses President's compensation Total cost $198,000 48,000 28,000 48,000 76,000 112,000 $510,000 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 705 201 00 100 100 Supplies 1009 ON 05 09 1008 Snow removal equipment depreciation 80 08 08 208 1008 Vehicle expenses 08 700 08 300 1005 office expenses 08 ON 400 600 1001 President's compensation os ON 455 555 1001 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 wherever it is required.) Snow Removal Travel to Jobs Job Support Other Total Wages Supplies Snow removal equipment depr. Vehicle expenses Office expenses President's compensation Total cost 2. Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.) Activity Cost Pool Snow removal Travel to jobs Job support Activity Rate per hundred square metres per kilometre per job 3. The company recently completed a 5,100-square-metre snow removal job at Hometown Hardware-a 91-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.) ABC Cost Activity Cost Pool Snow removal Travel to jobs Job support Total 4. The revenue from the Hometown Hardware job was $652.80 (5,100 square metres at $12.80 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 5. This part of the question is not part of your Connect assignment. 6. This part of the question is not part of your Connect assignment

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Bank Strategy, Governance And Ratings

Authors: P. Molyneux

3rd Edition

0230313345, 9780230313347

More Books

Students also viewed these Accounting questions

Question

List the five steps in the message-sending process.

Answered: 1 week ago

Question

List and explain the four steps in the communication process.

Answered: 1 week ago

Question

Describe how communication flows through organizations.

Answered: 1 week ago