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 $23.50 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 10,000 hundred square feet 388,500 miles 1,700 jobs Not applicable The total cost of operating the company for the year is $369,000 which includes the following costs: Wages Cleaning supplies. Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation $ 140,000 34,000 8,000 39,000 66,000 82,000 $ 369,000 Total cost Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Carpets Travel to Jobs Job Support Other Total Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation 74% 100 16% 100% 100% 0% 100% 71% 29% 100% 79% 0% 21% 100% 61% 39% 100% ex 80% 30% 70% 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 600 square foot carpet-cleaning job at the Flying N Ranch-a 58-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 $141.00 (600 square feet @ $23.50 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 600 square foot carpet-cleaning job at the Flying N Ranch-a 58-mile round-trip journey from the company's offices in Bozeman. Compute the cost of this job using the activity-based costing system. Note: Round your intermediate calculations and final answer to 2 decimal places. Cost of the job < Required 2 Required 4 > 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 $23.50 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 10,000 hundred square feet 388,500 miles 1,700 jobs Not applicable The total cost of operating the company for the year is $369,000 which includes the following costs: Wages Cleaning supplies. Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation $ 140,000 34,000 8,000 39,000 66,000 82,000 $ 369,000 Total cost Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Carpets Travel to Jobs Job Support Other Total Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation 74% 100 16% 100% 100% 0% 100% 71% 29% 100% 79% 0% 21% 100% 61% 39% 100% ex 80% 30% 70% 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 600 square foot carpet-cleaning job at the Flying N Ranch-a 58-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 $141.00 (600 square feet @ $23.50 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 600 square foot carpet-cleaning job at the Flying N Ranch-a 58-mile round-trip journey from the company's offices in Bozeman. Compute the cost of this job using the activity-based costing system. Note: Round your intermediate calculations and final answer to 2 decimal places. Cost of the job < Required 2 Required 4 >
Expert Answer:
Answer rating: 100% (QA)
Required 1 Prepare the firststage allocation of costs to the activity cost pools To allocate the tot... View the full answer
Posted Date:
Students also viewed these accounting questions
-
Private carriage is more important in the motor carrier segment of our transportation industry than any of the other four major modal segments. What factors have contributed to private carriage...
-
In what ways, if any, are exchange rates likely to affect your business?
-
In a Newtons-rings experiment, a plano-convex glass (n = 1.52) lens having diameter 10.0 cm is placed on a flat plate as shown in Figure 37.18a. When 650-nm light is incident normally, 55 bright...
-
On its books, Navarro Companys Cash account shows an ending balance of \($770\). The bank statement for the current period shows a \($20\) service charge and an NSF check for \($100.\) A \($250\)...
-
Selected condensed data taken from a recent balance sheet of Heidebrecht Inc. are as follows. HEIDEBRECHT INC. Balance Sheet (partial) Cash ............. $ 8,041,000 Short-term investments ......
-
On April 2, 2020, you are considering one of the newly issued 30-year, semi-annual coupon bonds shown in the following exhibit. Issuer Coupon Price Callable Call Price B 6.50% 101 Currently callable...
-
You throw 3 balls from the top of a building. All 3 have the same initial speed and are thrown simultaneously. Ball 1 is thrown at an angle of 30 o above the horizontal, ball 2 is thrown...
-
What matters should an auditor consider when planning an audit?
-
Explain how stewardship or agency theory helps to explain the demand for audits.
-
Which of the following statements best describes an auditor's responsibility to detect errors and fraud? a. The auditor should study and evaluate the client's internal control, and design the audit...
-
What are some potential problem areas that an auditor should consider when planning an audit?
-
Which of the following types of audit uses as its criteria laws and regulations? a. Operational audit. b. Compliance audit. c. Financial statement audit. d. Financial audit.
-
Identify and summarize a contemporary social issue of your choice. This social issue will become the main topic of your final project, and you will revisit the issue throughout the course as you work...
-
Subprime loans have higher loss rates than many other types of loans. Explain why lenders offer subprime loans. Describe the characteristics of the typical borrower in a subprime consumer loan.
-
A nozzle represents an open system. State True (T) or False (F)
-
A system is a finite quantity of matter. State True (T) or False (F)
-
Work is a path function. State True (T) or False (F)
Study smarter with the SolutionInn App