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Problem 7-20 (Algo) Evaluating the Profitability of Services (L07-2, LO7-3, L07-4, L07-5) 205 Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman,

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Problem 7-20 (Algo) Evaluating the Profitability of Services (L07-2, LO7-3, L07-4, L07-5) 205 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 $23.70 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 Activity for the Year Cleaning carpets Square feet cleaned (005) 13,000 hundred square feet Miles driven 182,500 miles Job support Number of jobs 1,700 jobs Other (organization-sustaining costs and idle capacity costs) None Not applicable Travel to Jobs The total cost of operating the company for the year is $374,000 which includes the following costs ces Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses office expenses President's compensation Total cost $ 138,000 32,000 18,000 36,000 68,000 82.000 $ 374,000 Resource consumption is distributed across the activities as follows: Distribution of resource Consumption Acrons Activities Cleaning Travel Job Carpets to Jobs Support Wages 709 Cleaning supplies 03 00 Cleaning equipment depreciation 738 Vehicle expenses 08 761 0 office expenses 00 640 124 00 1008 0 08 Other 188 00 270 240 361 Total 100 1001 1001 1001 1008 01 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Travel Carpets to Jobs Wages 705 120 Cleaning supplies 1008 00 Cleaning equipment depreciation os Vehicle expenses 08 761 office expenses 00 OR President's compensation 02 03 730 Job Support 08 00 08 08 640 324 Other 188 00 270 245 368 681 Total 1000 1008 1000 1000 1000 1008 50 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. 2. Compute the activity rates for the activity cost pools. 3. The company recently completed a 200 square foot carpet-cleaning job at the Flying N Ranch-a 53-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 Ranch was $47.40 (200 square feet a $23.70 per hundred square feet). Calculate the customer margin earned on this job. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Prepare the first stage allocation of costs to the activity cost pools. Cleaning Travel to Carpets Jobs Job Support Wages Cleaning supplies Cleaning equipment depreciation Other Total $ 0 0 0 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 200 square foot carpet-cleaning job at the Flying N Ranch-a 53-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 Ranch was $47.40 (200 square feet a $23.70 per hundred square feet). Calculate the customer 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 company recently completed a 200 square foot carpet-cleaning job at the Flying N Ranch --a 53-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

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