Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company hasalways charged a flat fee per hundred square feet of carpet cleaned. The current fee is $22.50 per hundred square feet. However,there is some question about whether the company is actually making any money on jobs for some customers-particularly thoselocated on remote ranches that require considerable travel time. The owner's daughter, home for the summer from college, hassuggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting offour activity cost pools. The activity cost pools and their activity measures appear below:Activity Cost PoolCleaning carpetsTravel to jobsJob supportOther (organization-sustaining costs andidle capacity costs)Activity MeasureSquare feet cleaned (00s)Miles drivenNumber of jobsNoneActivity for the Year7,000 hundred square feet266,500 miles1,600 jobsNot applicableThe total cost of operating the company for the year is $352,000 which includes the following costs:WagesCleaning suppliesCleaning equipment depreciationVehicle expensesOffice expensesPresident's compensation.Total cost$ 143,00020,00015,00037,00059,00078,000$352,000Resource consumption is distributed across the activities as follows:Distribution of Resource Consumption Across ActivitiesCleaning Travel toCarpetsJobsJobSupportOtherTotalWages80%14%0%6%100%Cleaning supplies100%0%0%0%100%Cleaning equipment depreciation72%0%0%28%100%Vehicle expenses0%79%0%21%100%Office expenses0%President's compensation0%0%0%62%34%38%100%66%100%Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and soon.Required 1 Required 2 Required 3 Required 4Prepare the first-stage allocation of costs to the activity cost pools.WagesCleaning suppliesCleaning equipment depreciationVehicle expensesOffice expensesPresident's compensationTotal costCleaningCarpetsTravel to JobsJob SupportOtherTotalRequired 1 Required 2Required 3Required 4Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.)Activity Cost PoolActivity Rateper hundred square feetCleaning carpetsTravel to jobsJob supportper mileper jobRequired 1 Required 2 Required 3Required 4The company recently completed a 600 square foot carpet-cleaning job at the Flying N Ranch-a 54-mile round-trip journeyfrom the company's offices in Bozeman. Compute the cost of this job using the activity-based costing system. (Round yourintermediate calculations and final answer to 2 decimal places.)Cost of the jobRequired 1 Required 2 Required 3Required 4The revenue from the Flying N Ranch was $135.00 (600 square feet @ $22.50 per hundred square feet). Calculate thecustomer margin earned on this job. (Negative customer margins should be indicated with a minus sign. Round yourintermediate calculations and final answers to 2 decimal places.)Customer margin

Activity based costing is a method of costing which is used for allocation of indirect or overhead…

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 $22.50 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 Job support Other (organization-sustaining costs and idle capacity costs) Activity Measure Square feet cleaned (00s) Miles driven Number of jobs None Activity for the Year 7,000 hundred square feet 266,500 miles 1,600 jobs Not applicable The total cost of operating the company for the year is $352,000 which includes the following costs: Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost $ 143,000 20,000 15,000 37,000 59,000 78,000 $352,000 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Travel to Carpets Jobs Job Support Other Total Wages 80% 14% 0% 64 100% Cleaning supplies 100% 0% 0% 100% Cleaning equipment depreciation 72% 0% 28% 100% Vehicle expenses 0% 79% 21% 100% Office expenses 0% 62% 38% 100% President's compensation 0% 0% 34% 66% 100% Job support consists of receiving calls from potential customers at the home office, scheduling jobs, billing, resolving issues, and so on. Required 1 Required 2 Required 3 Required 4 Prepare the first-stage allocation of costs to the activity cost pools. Wages Cleaning supplies Cleaning equipment depreciation "Vehicle expenses Office expenses President's compensation Total cost Cleaning Travel to Jobs Job Support Other Total Carpets Required 1 Required 2 Required 3 Required 4 Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.) Activity Cost Pool Cleaning carpets Travel to jobs Job support Activity Rate per hundred square feet per mile per job Required 1 Required 2 Required 3 Required 4 The company recently completed a 600 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 $135.00 (600 square feet @ $22.50 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