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 $2225 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 for the Year Activity Cost Pool Cleaning carpets Travel to jobs Job support Other (organization-sustaining costs and idle capacity costs) Activity Measure Square feet cleaned (ees) -13,500 hundred square feet 300,000 miles 1,700 jobs Miles driven Number of jobs None Not applicable The total cost of operating the company for the year Is $347,000 which Includes the following costs: $ 144,00e Wages Cleaning supplies cleaning equipment depreciation Vehicle expenses Office expenses President's compensation 32,000 8,e0e 26, e00 56,eee 81, eee S 347,e0e Total cost Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Travel to Jobs 11 Job Support Other Total Carpets 78% wages Cleaning supplies Lleaning equipment depreciation Vehicle expenses 11% 1eer 100% es zex 81% 19% OFfice expenses 64% 36% 1ees President's compensation 33% 67% 1e0x Job support consists of recetving 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 200 square foot carpet-cieaning Job at the Flying N Ranch-a 55-mile round-trlp journey from the company's offices In Bozeman. Compute the cost of this (ob using the activity-based costing system

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Gallatin Carpet Cleaning is a small, famly-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 $22.25 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 (90s)
Activity for the Year
-13,500 hundred square feet
300,000 miles
1,700 jobs
Miles driven
Number of jobs
None
Not applicable
The total cost of operating the company for the year is $347,000 which Includes the following costs:
24
Wages
Cleaning supplies
cleaning equipment depreciation
Vehicle expenses
144,000
32,000
8,000
26, 000
56, 000
office expenses
81, eee
$ 347, 000
President's compensation
Total cost
Resource consumption is distributed across the activitles as follows:
Distribution of Resource Consumption Across Activities
Cleaning
Travel
Carpets
78%
to Jobs
11%
Job Support Other
11%
Total
wages
Cleaning supplies
Cleaning equipment depreciation
Vehicle expenses
Office expenses
President's compensation
0%
1e0%
100%
1ee%
70%
0%
0%
30%
1e0%
81%
19%
100%
0% e%
64%
36%
0%
33%
67%
100%
Job support consists of recetving calls from potential customers at the home office, scheduling Jobs. billing, resolving sues, 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 200 square foot carpet-cleaning Job at the Flying N Ranch-a 55-mile round-trip journey from
the company's offices In Bozeman. Compute the cost of this Job using the activity-based costing system.
Transcribed Image Text:Gallatin Carpet Cleaning is a small, famly-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 $22.25 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 (90s) Activity for the Year -13,500 hundred square feet 300,000 miles 1,700 jobs Miles driven Number of jobs None Not applicable The total cost of operating the company for the year is $347,000 which Includes the following costs: 24 Wages Cleaning supplies cleaning equipment depreciation Vehicle expenses 144,000 32,000 8,000 26, 000 56, 000 office expenses 81, eee $ 347, 000 President's compensation Total cost Resource consumption is distributed across the activitles as follows: Distribution of Resource Consumption Across Activities Cleaning Travel Carpets 78% to Jobs 11% Job Support Other 11% Total wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation 0% 1e0% 100% 1ee% 70% 0% 0% 30% 1e0% 81% 19% 100% 0% e% 64% 36% 0% 33% 67% 100% Job support consists of recetving calls from potential customers at the home office, scheduling Jobs. billing, resolving sues, 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 200 square foot carpet-cleaning Job at the Flying N Ranch-a 55-mile round-trip journey from the company's offices In Bozeman. Compute the cost of this Job using the activity-based costing system.
Resource consumptlon Is distributed across the activitles as follows:
Distribution of Resource Consumption Across Activities
Cleaning
Carpets
Travel
to Jobs
Job Support Other
Total
78%
100%
11%
Wages
Cleaning supplies
Cleaning equipment depreciation
Vehicle expenses
Office expenses
President's compensation
11%
0%
100%
0%
0%
0%
100%
70%
0%
0%
30%
100%
0%
81%
0%
19%
100%
0%
0%
64%
36%
100%
0%
0%
33%
67%
100%
Job support consists of recelvVing calls from potentlal customers at the home office, scheduling Jobs, billing, resolving Issues, and s
on.
Required:
1 Prepare the first-stage allocatlon of costs to the activity cost pools.
2 Compute the activity rates for the activity cost pools.
3. The company recently completed a 200 square foot carpet-cleaning job at the Flying N Ranch-a 55-mile round-trip Journey from
the company's offices in Bozeman. Compute the cost of this Job using the activity-básed costing system.
4. The revenue from the Flying N Ranch was $44.50 (200 square feet @ $22.25 per hundred square feet). Calculate the customer
margin earned on this job.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
Required 4
The company recently completed a 200 square foot carpet-cleaning job at the Flying N Ranch-a 55-mile round-trip journey
from the comnpany'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:Resource consumptlon Is distributed across the activitles as follows: Distribution of Resource Consumption Across Activities Cleaning Carpets Travel to Jobs Job Support Other Total 78% 100% 11% Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation 11% 0% 100% 0% 0% 0% 100% 70% 0% 0% 30% 100% 0% 81% 0% 19% 100% 0% 0% 64% 36% 100% 0% 0% 33% 67% 100% Job support consists of recelvVing calls from potentlal customers at the home office, scheduling Jobs, billing, resolving Issues, and s on. Required: 1 Prepare the first-stage allocatlon of costs to the activity cost pools. 2 Compute the activity rates for the activity cost pools. 3. The company recently completed a 200 square foot carpet-cleaning job at the Flying N Ranch-a 55-mile round-trip Journey from the company's offices in Bozeman. Compute the cost of this Job using the activity-básed costing system. 4. The revenue from the Flying N Ranch was $44.50 (200 square feet @ $22.25 per hundred square feet). Calculate the customer margin earned on this job. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 The company recently completed a 200 square foot carpet-cleaning job at the Flying N Ranch-a 55-mile round-trip journey from the comnpany'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
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