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Required 1, 2, 3, and 4. Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has
Required 1, 2, 3, and 4.
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 $22.60 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 control Activity Measure Activity for the Year Cleaning carpets Square feet eleaned (003) 7,500 hundred square feet Travel to jobs 218,000 miles Job support Number of jobs 1,900 Jobs Other (organization-untaining costs and idle capacity costa) None Not applicable Miles driven The total cost of operating the company for the year is $358,000 which includes the following costs: Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses of tice expenses President's compensation Total cost $ 138,900 34,000 6,000 33,000 58,000 29.000 $ 358,000 Resource consumption is distributed across the activities as follows: Distribution of resource Consumption across Activities Resource consumption is distributed across the activities as follows: Distribution of Wesource Consumption Aeroan activities Cleaning Travel Job Carpets to Jobs Support Wages 766 00 Cleaning supplies 1001 09 Cleaning equipment depreciation 720 Vehicle expenses 00 770 ON office expenses 05 521 Presidente compensation ON os 345 130 Os 05 ON Other 118 00 281 235 431 661 Total 1001 1001 1008 1000 1005 1000 00 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 800 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 $180,80 (800 square feet a $2260 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 Required 4 Check my we L. DIE U saye am UI LUI UE OLUVRE LUI NUUS. 2. Compute the activity rates for the activity cost pools. 3. The company recently completed a 800 square foot carpet-cleaning job at the Flying N Ranch - 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 $180.80 (800 square feet a $22.60 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 Carpets Travel to Jobs Job Support Other Total Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost Required 2 >Step by Step Solution
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