what advice would you give the president concerning pricing jobs in the future? And why?

Activity-Based Costing: A Tool to Aid Decision Making PROBLEM 6-20 Evali HEM 6-20 Evaluating the Profitability of Services (L05-2, L06-3, LOS 4. LOS-51 in Carpet Cleaning is a small, family-owned business operating out of Bozeman. Mon- For its services, the company has always charged a flat fee per hundred square feet of carpet The current fee is 328 per hundred square feet. However, there is some question about heather the company is actually making any money on jobs for some customers particularly se located on remote ranches that require considerable travel time. The owner's daughter, home the summer from college, has suggested investigating this question using activity-based cost- After some discussion, a simple system consisting of four activity cost pools seemed to be dequate. The activity cost pools and their activity measures appear below: Activity Cost Pool Activity Measure Cleaning carpets ..... ...... Travel to jobs..... Job support. Other (costs of idle capacity and organization-sustaining costs)... Square feet cleaned (00s) Miles driven Number of jobs Activity for the Year 20,000 hundred square feet 60,000 miles 2,000 jobs None Not applicable The total cost of operating the company for the year is $430,000, which includes the following costs: Wages. Cleaning supplies ......... Cleaning equipment depreciation.... Vehicle expenses .... Office expenses.............. President's compensation Total cost. $150,000 40,000 20,000 80,000 60,000 80.000 $430,000 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption across Activities Cleaning Carpets Job Support Other Total 10% 70% 100% 80% Wages... Cleaning supplies Cleaning equipment depreciation.. Vehicle expenses Office expenses. President's compensation .. Travel to Jobs 20% 0% 0% 60% 0% 0% 0% 0% 45% 40% 0% 100% 100% 100% 100% 100% 100% 0% 20% 40% 55% 60% 0% 0% 0% Job support consists of receiving calls from potential customers at the home office, schedul ing jobs, billing, resolving issues, and so on. Required