Omega Lawn Care Services is a small, family-owned business operating out of Rexdale, Ontario. The company has always charged a flat fee per hundred square feet of lawn service for its services. The current fee is $30 per hundred square feet. However, there is some question about whether the company is making any money on jobs for some customers, particularly those located in remote areas requiring considerable travel time. The owner’s son Edward Scott, a recent Accounting graduate 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:

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Activity Cost Pool Lawns serviced Travel to jobs Job support Other (organization-sustaining costs and idle capacity costs) The total cost of operating the company includes the following costs: Activity Measure Square feet cleaned (the 00s) Kms driven Number of jobs None Activity for the Year 20,000 hundred square feet 60,000 km 2,000 jobs Not applicable Activity Cost Pool Lawns serviced Travel to jobs Job support Other (organization-sustaining costs and idle capacity costs) The total cost of operating the company includes the following costs: Activity Measure Square feet cleaned (the 00s) Kms driven Number of jobs None Activity for the Year 20,000 hundred square feet 60,000 km 2,000 jobs Not applicable

Answer rating: 100% (QA)

1 Allocation of operating costs to cost pools Cost pools Operating costs Cleaning Carpets Travel to Jobs Job Support Other Total Wages 105000 30000 0 ... View the full answer