Problem 7-20 (Algo) Evaluating the Profitability of Services (LO7-2, LO7-3, L07-4, L07-5) 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 $23.20 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 (00.) 9,000 hundred square feet Travel to jobs Miles driven 423,500 miles Job support Number of jobs 1,B0D jobs Other (organization-sustaining costs and idle capacity conta) None Not applicable The total cost of operating the company for the year is $363,000 which includes the following costs: Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses office expenses President's compensation Total cost $ 141,000 25,000 15,000 37,000 65,000 80,000 $363,000 www President's compensation Total cost 80,000 $363.000 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Travel Carpeta to Jobs Wages 72 100 Cleaning supplies 1000 08 Cleaning equipment depreciation 745 08 Vehicle expenses 08 75 office expenses 08 ot President's compensation Os 08 Job Support 08 08 os 00 568 275 Other 181 OR 260 258 445 731 Total 100 1005 1000 1000 1000 1001 Job support consists of receiving calls from potential customers at the home office, scheduling jobs, biling, 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 400 square foot carpet-cleaning job at the Flying N Ranch-a 52-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 $92.80 (400 square feet a $23.20 per hundred square feet). Calculate the customer margin earned on this job. Complete this question by entering your answers in the tabs below. Requited 1 Required 2 Required 3 Required 4 Other Total $ 0 0 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 Vehicle expenses Office expenses President's compensation $ Total cost 0 0$ $ 0 0 0 0 0 0 $ 0 Roule 1 Required 2 > Required 1 Requirda 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 Rate Cleaning carpets per hundred square feet Travel to jobs per mile Job support per job os Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 ES The company recently completed a 400 square foot carpet-cleaning job at the Flying N Ranch-a 52-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 00:32:50 Complete this question by entering your answers in the tabs below. eBook Print References Required 1 Required 2 Required 3 Required 4 The revenue from the Flying N Ranch was $92.80 (4 hundred square feet @ $23.20 per hundred square feet). Calculate the customer margin earned on this job. (Negative customer margins should be indicated with a minus sign. Round your Intermediate calculations and final answers to 2 decimal places.) Customer margin (Required 3 Required