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Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $28 per hundred square feet. However. there is some question about whether the company is actually making any money on jobs for some customers-particularly 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, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below: The total cost of operating the company for the year is $430,000, which includes the following costs: Page 344 Resource consumption is distributed across the activities as follows: Resource consumption is distributed across the activities as follows: Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on. Required: 1. Using Exhibit 7-6 as a guide, prepare the first-stage allocation of costs to the activity cost pools. 2. Using Evhibit 7-7 as a guide, compute the activity rates for the activity cost pools. 3. The company recently completed a 500 square foot carpeteleaning job at the Flying N Ranch-a 75 -mile round-rip journcy from the company's offices in Bozeman. Compute the cost of this job using the activitybased costing system. 4. The revenue from the Flying N Ranch was $140 (500 square feet @$28 per hundred square feet). Using ( Exhibit 7-12 as a guide. calculate the customer margin earned on this job. 5. What do you conclude concerning the profitability of the Flying N Ranch job? Explain. 6. What advice would you give the president concerning pricing jobs in the future? The activity rates are computed as follows: 4. The margin earned on the job can be easily computed by using the costs calculated in part (3) above