Anugerah Carpet Cleaning is a small business operating in Rawang, Selangor. For its services, the company...

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Anugerah Carpet Cleaning is a small business operating in Rawang, Selangor. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is RM 28 per hundred square feet. However, there is a question whether the company is actually making any money on jobs or not for some customers. Aishah, the owner's daughter in law who has a degree in accounting proposed a new costing method called as Activity Based Costing system. She designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below: Activity measure Square feet cleaned Activity cost pool Cleaning carpets Travel to jobs Job support Activity for the year 20,000 square feet 60,000 kilometres 2,000 jobs Not applicable Kilometre driven Number of jobs Other None The total cost of operating the company for the year is RM 430,000, which includes the following costs: RM Cost Components Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses Managing Director compensation Total cost 150,000 40,000 20,000 80,000 60,000 80,000 430,000 Resource consumption is distributed across the activities as follows: Travel to Job Others Cleaning carpets 70% jobs 20% support 0% 10% Wages Cleaning supplies Cleaning depreciation Vehicle expenses Office expenses Managing compensation 0% 0% 100% 80% 0% 0% equipment 0% 20% 40% 55% 0% 60% 0% 0% 0% 45% Director 0% 0% 40% 60% Job support consists of receiving calls from potential clients at the home office, scheduling jobs, billing, resolving issues, and so on. For Travel to jobs, it is the company policy to charge a return trip for the job at customer premise. i. Prepare a first stage allocation of costs to the activity cost pools. ii. Compute the activity rates for the activity cost pools. iii. The company recently completed a 500 square feet carpet cleaning job at the Ar-Rahim Mosque, Putrajaya. The one way distance of the mosques from the company office in Rawang is 32.5 kilometres. Compute the cost of this job using the Activity based costing method. iv. Calculate the customer margin earned on Ar-Rahim Mosque's job. v. What does Aishah conclude concerning the profitability of the Ar-Rahim Mosque' job? Explain. vi. What advice would Aishah gives to her father in-law (the Managing Director) concerning pricing job in the future? Anugerah Carpet Cleaning is a small business operating in Rawang, Selangor. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is RM 28 per hundred square feet. However, there is a question whether the company is actually making any money on jobs or not for some customers. Aishah, the owner's daughter in law who has a degree in accounting proposed a new costing method called as Activity Based Costing system. She designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below: Activity measure Square feet cleaned Activity cost pool Cleaning carpets Travel to jobs Job support Activity for the year 20,000 square feet 60,000 kilometres 2,000 jobs Not applicable Kilometre driven Number of jobs Other None The total cost of operating the company for the year is RM 430,000, which includes the following costs: RM Cost Components Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses Managing Director compensation Total cost 150,000 40,000 20,000 80,000 60,000 80,000 430,000 Resource consumption is distributed across the activities as follows: Travel to Job Others Cleaning carpets 70% jobs 20% support 0% 10% Wages Cleaning supplies Cleaning depreciation Vehicle expenses Office expenses Managing compensation 0% 0% 100% 80% 0% 0% equipment 0% 20% 40% 55% 0% 60% 0% 0% 0% 45% Director 0% 0% 40% 60% Job support consists of receiving calls from potential clients at the home office, scheduling jobs, billing, resolving issues, and so on. For Travel to jobs, it is the company policy to charge a return trip for the job at customer premise. i. Prepare a first stage allocation of costs to the activity cost pools. ii. Compute the activity rates for the activity cost pools. iii. The company recently completed a 500 square feet carpet cleaning job at the Ar-Rahim Mosque, Putrajaya. The one way distance of the mosques from the company office in Rawang is 32.5 kilometres. Compute the cost of this job using the Activity based costing method. iv. Calculate the customer margin earned on Ar-Rahim Mosque's job. v. What does Aishah conclude concerning the profitability of the Ar-Rahim Mosque' job? Explain. vi. What advice would Aishah gives to her father in-law (the Managing Director) concerning pricing job in the future?

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i Cost components RM Cleaning carpets Travel to job Job support Others Wages 150000 1... View the full answer