Pc2-Activity Base Costing for a Smail Business Gallatin Carpet Cleaning is a smail, family-owned ts services the company has always charged a flat fee per hundred square feet of The curertee $2e 0 per ruded square feet Acost of$21 50per square foot by taking some question about whether the company is actually making any money on jobs for some cu particularily 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, a simple system consisting of four activity cost pools seems to be adequate. The activty cost pools and their activity measures appear below business operating out of Bozeman, Montana. For feet of carpet cleaned was computed $21.50 per hundred squar e feet. However, there is $430 000/20 000 hundred square feet Activity Cost pool Cleaning carpets Travel to jobs Job support Activity measure Square feet cleaned Miles driven Number of jobs Hours of work Activity for the year 2,000,000 square feet 60,000 miles 2,000 jobs 50,000 hours Other The total cost of operating the company for the year is $430000, which includes the following costs: Exhibit 1 -Total Costs of the Company Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses Presidents' compensation Total Cost $ 150,000 40,000 20,000 80,000 60,000 80,000 430,000 Since the business is small, workers that clean carpets also do other activities. The vehicles are used for cleaning carpets and other activities. The president will help with job support and administrative activities. Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on Because of thi allocates all costs. Therefore, the entire $430,000 needs to be allocated. The distribution of costs by Activity Cost Pool is as follows: Exhibit 2--Distribution of Costs by Activity Cost Pool Cleaning Travel to Jobs Job Other Total Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses 100% 100% 100% 100% 100% 100% 40% 55% 60% %