Question

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 $23.45 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 (ees) Miles driven Number of jobs Activity for the Year hundred square 9,500 feet 147,000 miles 1,700 jobs None Not applicable The total cost of operating the company for the year is $352,000 which includes the following costs: $ 144, eee 27,000 Wages Cleaning supplies Cleaning equipment depreciation Wahila AVRARD 10,000 20 ΔΟΛ

Answer 1

Requirement 1
			Cleaning	Travel to	job	other	total
			carpets	jobs	support
Wages			105120	14400		24480	144000
Cleaning supplies			27000				27000
Cleaning Equipment depreciation			7100			2900	10000
Vechicle expenses				18750		6250	25000
office expenses					42210	24790	67000
presidents compensation					26070	52930	79000
total cost			139220	33150	68280	111350	352000
Requirement 2
Activity cost pool			Activity rate
Cleaning carpets			14.65	per hundered square feet
Travel to jobs			0.23	per mile
job support			40.16	per job
Requirement 3
Cost of the job			82.57
(2*14.65 +57*.23+40.16)
Requirement 4
Customer margin-Activity Based
Sales					46.9
Costs:
Cleaning carpets				29.3
Travel to jobds				13.11
job support				40.16
					82.57
Customer margin					-35.67	answer