olvet Segmented Incor × d) ? erto.mheducation.com/hrn.tpx Gallatin Carpet Cleani

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olvet Segmented Incor × d) ? erto.mheducation.com/hrn.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. Ater some discussion, a simple systen Activity Measure Cleaning carpets Travel to jobs Job support Other (costs of idle capacity and organization-sustaining costs) Square feet cleaned (00s) Miles driven Number of jobs 13,500 hundred square feet 109,000 milles 2,000 jobs None Not applicable The total cost of operating the company for the year is $354.000 which includes the tollowing costs Wages Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost $ 145,000 25,000 9,000 31.000 65,000 79,000 Resource consumption is distributed across the activities as follows

Explanation / Answer

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First stage allocation of cost to activity cost pools Particulars Total Cost Cleaning Carpets Travel to Jobs Job Support Others % Amount % Amount % Amount % Amount Wages $145,000.00 72% $104,400.00 14% $20,300.00 0% $0.00 14% $20,300.00 Cleaning Supplies $25,000.00 100% $25,000.00 0% $0.00 0% $0.00 0% $0.00 Cleaning Equipment depreciation $9,000.00 72% $6,480.00 0% $0.00 0% $0.00 28% $2,520.00 Vehicle Expenses $31,000.00 0% $0.00 80% $24,800.00 0% $0.00 20% $6,200.00 Office Expense $65,000.00 0% $0.00 0% $0.00 61% $39,650.00 39% $25,350.00 President's Compensation $79,000.00 0% $0.00 0% $0.00 32% $25,280.00 68% $53,720.00 Total $354,000.00 $135,880.00 $45,100.00 $64,930.00 $108,090.00

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