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 Rancha 53-mile round-trip journey from the companys offices in Bozeman. Compute the cost of this job using the activity-based costing system.

4. The revenue from the Flying N Ranch was $191.60 (800 square feet @ $23.95 per hundred square feet). Calculate the customer margin earned on this job.

Gallatin Carpet Cleaning Is a small, famly-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 $23.95 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 requlre considerable travel time. The owners 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 thelr activity measures appear below Activity Cost Pool Cleaning carpets Travel to jobs Job support Other (organization-sustaining costs and idle Activity Measure Square feet cleaned (8es) Miles driven Nunber of fobs Activity for the Year 11,888 hundred square f 341,800 miles 1,780 jobs capacity costs) Not applicable The total cost of operating the company for the year is $362,000 which Includes the following costs $ 141,880 28,888 17,808 32,888 64,808 88,868 $ 362,808 Cleaning supplies Vehicle expenses Office expenses President' Total cost s compensation Resource consumption Is distributed across the activities as follows: Distribution of Resource Consunption Across Activities Job Total 100% 100% Carpets to Jobs Support Other Wages Cleaning supplies Cleaning equipnent depreciation Vehicle expenses Office expenses President's compensation 75% 13% 71% 29% 76 100% 100% 61% 28% 39% 72% Job support consists of recelving calls from potential customers at the home office, schedullng Jobs, billing, resolving Issues, and s0 on