Kenoshe Winter Services is a small family owned snow.removal business. For its services, the company has always charged auf per hundred square metres of snow removal. The current fee is $11.65 per hundred square metres. However, there is some question about whether the company is actually making any money on jobs for some customers particularly those tooted on more remote properties that require considerable travel time. The owner's daughter, home from school for the summer, has suggested investigating this question using ABC. After some discussion, a simple system consisting of four activity cost pools seemed to be adequate. The activity cost pools and their activity measures appear below Activity Cost Pool Activity Measure ACEIVERY For the Year Snow removal Square metres cleaned (699) 39,39 hundred square mere Travel to jobs Kilometres driven 17,900 kilometres Job support Number of jobs 4000 Other (costs of idle capacity and organization Hone NA sustaining costs) The total cost of operating the company for the year is $435,000, which includes the following costs Wages Supplies Snow removal equipment depreciation Vehicle expenses Office expenses President's compensation Total cost $160,000 43,000 23, 600 43,000 66,000 92.000 $435,000 Ce consumption is distributed across the activities as follows: Resource consumption is distributed across the activities as follows: Wages Supplies Snow removal equipment depreciation Vehicle expenses office expenses President's compensation Distribution of Resource Consumption across Activity Cost Pools Snow Travel to Job Removal Jobs Support Other BOX 10% ex 16x 100% ox 0% 6X 85% 0% ex 15% 9X 65% ex 35% ex ex 55% ox ox 35% 65% Total 100% 100% 160 10 100% 100% 45% 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. (Do not leave any empty spaces; Input a o wherever It is required.) Snow Removal Travel to Jobs Job Support Other Total Wages Supplies Snow removal equipment depr. Vehicle expenses Office expenses President's compensation Total cost 2. Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.) Acuvity Cost Pool Snow removal Travel to jobs Job support Activity Rate per hundred square metres per kilometre per job 3. The company recently completed a 4,100-square-metre snow removal job at Hometown Hardware-a 81-kilometre round-trip journey from Kenosha's offices. Compute the cost of this job using the ABC system. (Round your answers to 2 decimal places.) ABC Cost Activity Cost Pool Snow removal Travel to jobs Job support Total 4. The revenue from the Hometown Hardware job was $477.65 (4.100 square metres at $11.65 per hundred square metress Prepare a report showing the margin from this job (Round your answers to 2 decimal places) Sales Cost: Snow removal Travel to jobs Job support Product margin Kenosha Winter Services is a small, family owned snow-removal business. For its services, the company has always charged a flat fee per hundred square metres of snow removal. The current fee is $11.65 per hundred square metres. However, there is some question about whether the company is actually making any money on jobs for some customers-particularly those located on more remote properties that require considerable travel time. The owner's daughter, home from school for the summer has suggested investigating this question using ABC. After some discussion, a simple system consisting of four activity cost pools seemed to be adequate. The activity cost pools and their activity measures appear below: Activity Cost Pool Activity Measure Activity for the Year Snow removal Square metres cleaned (05) 39,390 hundred square metres Travel to jobs Kilometres driven 17.900 kilometres Job Number of jobs 600 jobs Other (costs of 101e capacity and organization- sustaining costs) None NA The total cost of operating the company for the year is $435,000, which includes the following costs Wages Supplies Snow removal equipment depreciation Vehicle expenses Office expenses President's compensation Total cost $168.000 43,000 23,000 43,000 66,000 92,000 $435,000
