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Chrome File Edit iew History People Window Help Bomb C | ezto.mheducation.com hm.tpx 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 $22.85 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, a simple system consisting of four activity cost pools seemed to be adequate. The activity cost pools and their activity measures appear below: Activity Cost Pool Cleaning carpets Travel to jobs Job support Other (costs of idle capacity and Activity Measure Square feet cleaned (00s) Number of jobs 9,000 hundred square feet 396,000 miles 2,000 jobs organization-sustaining costs) Not The total cost of operating the company for the year is $355,000, which includes the following costs $147,000 25,000 12,000 Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation 38,000 59,000 74,000 $355,000 Total cost Resource consumption is distributed across the activities as follows

Explanation / Answer

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Customer margin-Activity based costing
Amounts per Job

Cleaning
Carpets Travel to
Jobs Job
Support Other Total Wages $108780 $22050 $0 $16170 $147000 Cleaning supplies 25000 0 0 0 25000 Cleaning equipment depreciation 8400 0 0 3600 12000 Vehicle expenses 0 28880 0 9120 38000 Office expenses 0 0 37170 21830 59000 President's compensation 0 0 24420 49580 74000 Total cost $142180 $50930 $61590 $100300 $355000

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