uur.com dware Gallotin Carpet Cleaning is a small, familyowned 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 $22.30 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 (05) 13,500 hundred square feet Travel to jobs Miles driven 420,000 miles Job support Number of jobs 1,700 jobs Other (organization-sustaining costs and idle capacity costs) None Not applicable The total cost of operating the company for the year is $371,000 which includes the following costs: Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses office expenses President's compensation Total cost $ 142,000 35,000 18,000 34,000 69,000 73,000 $ 371,000 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Travel Carpets to Joba Wages 798 105 cleaning supplies 1008 09 cleaning equipment depreciation 698 ON Vehicle expenses 08 761 office expenses 08 08 President's compensation ou 08 Job Support 08 08 ON 0 596 326 Other 118 00 310 240 416 688 Total 1008 1001 1001 1005 1001 1008 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 400 square foot carpet-cleaning job at the Flying N Ranch-a 54mile 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 $89.20 (400 square feet a $22.30 per hundred square feet). Calculate the customer margin earned on this job 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 $ 0 0 0 Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost 0 0 0 0 $ 0 $ 0 $ 0 s 0 Required 1 Required 2 Required 3 Required 4 Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal plac Activity Rate per hundred square feet Activity Cost Pool Cleaning carpets Travel to jobs Job support per mile per job Required 1 Required 2 Required 3 Required 4 The company recently completed a 400 square foot carpet-cleaning job at the Flying N Ranch-a 54-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 Required 1 Required 2 Required 3 Required 4 The revenue from the Flying N Ranch was $89.20 (4 hundred square feet @ $22.30 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
