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rences Kenosha Winter Services is a small, family-owned snow-removal business. For its services, the company has always charged a flat fee per hundred square
rences Kenosha Winter Services is a small, family-owned snow-removal business. For its services, the company has always charged a flat fee per hundred square metres of snow removal. The current fee is $10.00 per hundred square metres. However, there is some question about whether the company is actually making any money on jobs for some customers-particularly those located on more remote properties that require considerable travel time. The owner's daughter, home from school for the summer, has suggested investigating this question using ABC. After some discussion, a simple system consisting of four activity cost pools seemed to be adequate. The activity cost pools and their activity measures appear below: Activity Cost Pool Snow removal Travel to jobs Activity Measure Square metres cleaned (005) Kilometres driven Number of jobs Other (costs of idle capacity and organization-sustaining costs) None Job support Activity for the Year 53,000 hundred square metres 29,660 kilometres. 250 jobs NA The total cost of operating the company for the year is $517,500, which includes the following costs; Wages Supplies Snow removal equipment depreciation. Vehicle expenses Office expenses President's compensation Total cost $201,000 48,500 28,500 48,500 77,000 114,000 $517,500 my
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