Question

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Posted on Sep 17, 2024

Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Carpets 74% wages Cleaning supplies Cleaning equipment depreciation Vehicle

Resource consumption is distributed across the activities as follows:

Distribution of Resource Consumption Across Activities

Cleaning

Carpets

74%

wages

Cleaning supplies

Cleaning equipment depreciation

Vehicle expenses

Office expenses

President's compensation

100%

70%

Travel to

Jobs

11%

79%

Job Support

Other

15%

30%

21%

64%

36%

32%

68%

Total

100%

Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and si

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 600 square foot carpet-cleaning job at the Flying N Ranch-a 57-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 $135.30 (600 square feet @ $22.55 per hundred square feet). Calculate the customer

margin earned on this job.

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 $22.55 per hundred square feet. Howeve 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 consistin four activity cost pools. The activity cost pools and their activity measures appear below. The total cost of operating the company for the year is $344,000 which includes the following costs The total cost of operating the company for the year is $344,000 which includes the following costs: Resource consumption is distributed across the activities as follows: Job support consists of recelving calls from potential customers at the home office, scheduling jobs, billing. resolving issues. nn Job support consists of receiving calis 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 600 square foot carpet-cleaning job at the Flying N Ranch-a 57 -mile round-tip 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 $135.30 (600 square feet $22.55 per hundred square feet). Calculate the customer margin earned on this job