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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 $22.05 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 Cleaning carpets Travel to jobs Activity Measure Square feet cleaned (88s) Activity for the Year 14,80e hundred square feet 402, 5ee miles 2,800 jobs Miles driven Job support Other (organization-sustaining costs and idle capacity costs) Number of jobs None Not applicable The total cost of operating the company for the year is $362,000 which Includes the following costs: Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation $ 143,eee 34, 800 14,eee 28, ৪ee 58, e0e 85,eee Total cost 362,8e0 Resource consumption is distributed across the activities as follows: Distribution of ReSource Consumption Across Activities Cleaning Caгpets Travel to Jobs Job Support Other Total wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses 75% 1e% e% 15% 1eex 1e0% ex e% 10e% 72% e% 28% 1eez ex 84% ex 16% 1eex e% 59% 41% 1ee% President's compensation 30% 7e% 100% Job support consits of recelving calls from potentlal customers at the home office, scheduling Jobs, billing, resolving Issues, and so

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 $22.05 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 Cleaning carpets Travel to jobs Activity Measure Square feet cleaned (88s) Activity for the Year 14,80e hundred square feet 402, 5ee miles 2,800 jobs Miles driven Job support Other (organization-sustaining costs and idle capacity costs) Number of jobs None Not applicable The total cost of operating the company for the year is $362,000 which Includes the following costs: Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation $ 143,eee 34, 800 14,eee 28, ৪ee 58, e0e 85,eee Total cost 362,8e0 Resource consumption is distributed across the activities as follows: Distribution of ReSource Consumption Across Activities Cleaning Caгpets Travel to Jobs Job Support Other Total wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses 75% 1e% e% 15% 1eex 1e0% ex e% 10e% 72% e% 28% 1eez ex 84% ex 16% 1eex e% 59% 41% 1ee% President's compensation 30% 7e% 100% Job support consits of recelving calls from potentlal customers at the home office, scheduling Jobs, billing, resolving Issues, and so

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Required 1 Required 2 Required 3 Required 4 The company recently completed a 800 square foot carpet-cleaning job at the Flying N Ranch-a 56-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
Transcribed Image Text:Required 1 Required 2 Required 3 Required 4 The company recently completed a 800 square foot carpet-cleaning job at the Flying N Ranch-a 56-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
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 $22.05 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 Cleaning carpets Travel to jobs Activity Measure Square feet cleaned (88s) Activity for the Year 14,000 hundred square feet 402, 500 miles 2,800 jobs Miles driven Job support Number of jobs Other (organization-sustaining costs and idle capacity costs) None Not applicable The total cost of operating the company for the year is $362,000 which includes the following costs: 143,000 Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses 34, 000 14,000 28, 000 Office expenses 58, 000 President's compensation 85, 900 Total cost 362,000 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Travel Carpets to Jobs Job Support Other Total 75% 1e% e% 15% 1eex Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses 100% ex 100% 72% 28% 100% e% 84% 16% 1eex Office expenses e% e% 59% 41% 100% President's compensation e% 30% 70% 10e% Job support consists of recelving calls from potentlal 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 800 square foot carpet-cleaning Job at the Flying N Ranch-a 56-mle 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 $176.40 (800 square feet @ $22.05 per hundred square feet). Calculate the customer margin earned on this Job.
Transcribed Image Text: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 $22.05 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 Cleaning carpets Travel to jobs Activity Measure Square feet cleaned (88s) Activity for the Year 14,000 hundred square feet 402, 500 miles 2,800 jobs Miles driven Job support Number of jobs Other (organization-sustaining costs and idle capacity costs) None Not applicable The total cost of operating the company for the year is $362,000 which includes the following costs: 143,000 Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses 34, 000 14,000 28, 000 Office expenses 58, 000 President's compensation 85, 900 Total cost 362,000 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Travel Carpets to Jobs Job Support Other Total 75% 1e% e% 15% 1eex Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses 100% ex 100% 72% 28% 100% e% 84% 16% 1eex Office expenses e% e% 59% 41% 100% President's compensation e% 30% 70% 10e% Job support consists of recelving calls from potentlal 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 800 square foot carpet-cleaning Job at the Flying N Ranch-a 56-mle 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 $176.40 (800 square feet @ $22.05 per hundred square feet). Calculate the customer margin earned on this Job.
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