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please help this is one question Problem 7-20 (Algo) Evaluating the Profitability of Services (L07-2, LO7-3, L07-4, LO7-5) Gallatin Carpet Cleaning is a small, family-owned
please help this is one question
Problem 7-20 (Algo) Evaluating the Profitability of Services (L07-2, LO7-3, L07-4, LO7-5) 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 $22.30 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: Activity Cost Pool Activity Measure Cleaning carpets Activity for the Year Square feet cleaned (05) Travel to jobs 8,000 hundred square feet Miles driven Job support 208,500 miles Number of jobs 2,000 jobs Other (organization-sustaining costs and idle capacity costs) None Not applicable The total cost of operating the company for the year is $361,000 which includes the following costs: Wages $ 138,000 Cleaning supplies 25,000 Cleaning equipment depreciation 14,000 Vehicle expenses 38,000 Office expenses 68,080 President's compensation 78,000 Total cost $361,800 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Travel to Job Carpets Jobs Support Other Total Wages 794 11% 04 104 100% Cleaning supplies 100% 04 30 100% Cleaning equipment depreciation 65 35 100% Vehicle expenses 04 764 24% 1004 Office expenses 584 424 100 President's compensation 09 349 66% 1995 09 es 424 CACH Office expenses A 09 584 1004 President's compensation 345 66 100% Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so . Required: 1. Prepare the first stage allocation of costs to the activity cost pools. 2. Compute the activity rates for the activity cost pools. 3. The company recently completed a 400 square foot carpet-cleaning job at the Flying N Ranch - 59-mile round-trip Journey from the company's offices in Bozeman. Compute the cost of this job using the activity based costing system. 4. The revenue from the Flying N Ronch was $89.20 (400 square feet o $22.30 per hundred square feet). Calculate the customer margin earned on this job Complete this question by entering your answers in the tabs below. Other Total Required 1 Required 2 Required 3 Required 4 Prepare the first stage allocation of costs to the activity cost pools, Cleaning Travel to Jobs Carpets Job Support Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost $ 0$ 0 $ os $ 0 0 0 0 0 0 0 $ 0 Required 2 > Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.) Activity Cost Pool Activity Rato Cleaning carpets per hundred square feet Travel to jobs per mile Job support per job Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 The company recently completed a 400 square foot carpet-cleaning job at the Flying N Ranch -a 59-mile round-trip Journey from the company's offices in Bozeman. Compute the cost of this job using the activity-based costing system (Round your intermediate calculations and final answer to 2 decimal places.) Cost of the job margin earned on this job. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 The revenue from the Flying N Ranch was $89.20 (4 hundred square feet @ $22.30 per hundred square feet). Calculate the customer margin earned on this job. (Negative customer margins should be indicated with a minus sign. Rourd your Intermediate calculations and final answers to 2 decimal places.) Customer margin Step by Step Solution
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