Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services,...
Fantastic news! We've Found the answer you've been seeking!
Question:
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 $22.35 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 14,500 hundred square feet 62,000 miles 1,900 jobs Not applicable The total cost of operating the company for the year is $354,000 which includes the following costs: Wages Cleaning supplies: Cleaning equipment depreciation Vehicle expenses office expenses President's compensation Total cost $ 143,000 28,000 14,000 27,000 66,000 76,000 $354,000 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Travel to Job Carpets Jobs Support Other Total Wages Cleaning supplies 71 138 0% 16 100% 100% 08 ON 100% Cleaning equipment depreciation Vehicle expenses office expenses President's compensation 66% 08 0% 346 100% 0% 80% 20% 100% 0% 0% 638 37% 100% 08 O 31 69 100% Job support consists of receiving 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 400 square foot carpet-cleaning job at the Flying N Ranch-a 52-mile 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 $89.40 (400 square feet @ $22.35 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 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 Carpets Travel to Jobs Job Support Other Total $ 0 0 0 0 0 0 $ 0 $ 0 $ 0 $ 0 $ 0 Required 1 Required 2 > 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 $22.35 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 14,500 hundred square feet 62,000 miles 1,900 jobs Not applicable The total cost of operating the company for the year is $354,000 which includes the following costs: Wages Cleaning supplies: Cleaning equipment depreciation Vehicle expenses office expenses President's compensation Total cost $ 143,000 28,000 14,000 27,000 66,000 76,000 $354,000 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Travel to Job Carpets Jobs Support Other Total Wages Cleaning supplies 71 138 0% 16 100% 100% 08 ON 100% Cleaning equipment depreciation Vehicle expenses office expenses President's compensation 66% 08 0% 346 100% 0% 80% 20% 100% 0% 0% 638 37% 100% 08 O 31 69 100% Job support consists of receiving 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 400 square foot carpet-cleaning job at the Flying N Ranch-a 52-mile 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 $89.40 (400 square feet @ $22.35 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 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 Carpets Travel to Jobs Job Support Other Total $ 0 0 0 0 0 0 $ 0 $ 0 $ 0 $ 0 $ 0 Required 1 Required 2 >
Expert Answer:
Answer rating: 100% (QA)
Gallatin Carpet Cleaning ActivityBased Costing Analysis 1 FirstStage Allocation of Costs to Activity Cost Pools Activity Cost Pool Cost Driver Total C... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Posted Date:
Students also viewed these accounting questions
-
a) which ionization gives the best sensitivity the analysis of chloramphenicol? b) The compound with highest retention factor? c) What is the resolution between yohimbine and chloramphenicol? d) What...
-
Julio receives utility from consuming food (F) and clothing (C) as given by the utility function U(F, C) = FC. In addition, the price of food is $2 per unit, the price of clothing is $10 per unit,...
-
During the first eight months of the year, Ms. V was self-employed and earned $63,200 net income. In September, she accepted a job with MW Company and earned $75,000 salary through the end of the...
-
In a properly planned financial statement audit, auditors typically coordinate tests of balance sheet and income statement accounts. For example, in practice auditors often coordinate tests of...
-
Keegan Corporations accounting records disclosed the following information for 2016: Cash sales ......................$850,000 Net credit sales .................... 720,000 Accounts receivable...
-
Two antennas located at points A and B are broadcasting radio waves of frequency 94.0 MHz, perfectly in phase with each other. The two antennas are separated by a distance d= 9.30 m. An observer, P,...
-
Jason Jackson is the sole proprietor of Pretty Pups, a business specializing in the sale of high-end pet gifts and accessories. Pretty Pups' sales totaled $986,000 during the most recent year. During...
-
Identify the valid and invalid overloaded methods in the following code: public class PointD { private double x; private double y; // method 1 public double distance (PointD pt) { // method 2 public...
-
Write a recursive method to take 5 numbers as inputs and outputs the maximum number of these numbers.
-
Assuming the following declaration and initialization of variables, Determine the value assigned to the variable in each of the following assignment statements, or explain why it is not a valid...
-
What is the output from the following code segment? int[] [] intArray = {{2, 5, 4), (6, 3), (9, 7, 1, 5}}; (intArray [0].length); (int Array [2]. length); System.out.println System.out.println...
-
In Problem 4, the Vehicle, Car, and Truck classes were implemented. Vehicles could include more such as motorcycles, buses, trains, ships, and airplanes. Using UML diagrams, organize these vehicles....
-
1. Based on what you have learned about an individual's right to self-determination and autonomy, do you believe this basic patient consent form adequately informs patients of their medical rights?...
-
One study found that the elderly who do not have children dissave at about the same rate as the elderly who do have children. What might this finding imply about the reason the elderly do not dissave...
-
A plane gate of uniform thickness holds back a depth of water as shown. Find the minimum weight needed to keep the gate closed. 0=30 L=3m Water w=2m P3.45
-
Obtain an expression for the kinetic energy flux, \(\int\left(V^{2} / 2 ight)\) \(ho \vec{V} \cdot d \vec{A}\), through cross section (1) of the control volume shown. x CV Width = w P4.12 h V
-
The velocity distribution for laminar flow in a long circular tube of radius \(R\) is given by the one-dimensional expression, \[\vec{V}=u \hat{i}=u_{\max }\left[1-\left(\frac{r}{R} ight)^{2} ight]...
Study smarter with the SolutionInn App