Prepare the first-stage allocation of costs to the activity

Reference no: EM13569721

Gore Range Carpet Cleaning is a family-owned business in Eagle-Vail, Colorado. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $22.95 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 more 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 Activity Measure Activity for the Year Cleaning carpets Square feet cleaned 10,000 hundred square feet Travel to jobs Miles driven 50,000 miles Job support Number of jobs 1,800 jobs Other None Not applicable The total cost of operating the company for the year is $340,000, which includes the following costs: Wages $ 140,000 Cleaning supplies 25,000 Cleaning equipment depreciation 10,000 Vehicle expenses 30,000 Office expenses 60,000 President's compensation 75,000 Total cost $ 340,000 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 75 % 15 % 0 % 10 % 100 % Cleaning supplies 100 % 0 % 0 % 0 % 100 % Cleaning equipment depreciation 70 % 0 % 0 % 30 % 100 % Vehicle expenses 0 % 80 % 0 % 20 % 100 % Office expenses 0 % 0 % 60 % 40 % 100 % President's compensation 0 % 0 % 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.Cleaning Carpets Travel to Jobs Job Support Other Total Wages $ $ $ $ $ Cleaning supplies Cleaning equipment depreciation Vehicle expenses Office expenses President's compensation Total cost $ $ $ $ $.

2. Compute the activity rates for the activity cost pools. Activity Cost Pool Activity Rate Cleaning carpets $ per hundred square feet Travel to jobs $ per mile Job support $ per job

3. The company recently completed a 6 hundred square-foot carpet-cleaning job at the Lazy Bee Ranch-a 52-mile round-trip from the company's offices in Eagle-Vail. Compute the cost of this job using the activity-based costing system. Cost $

4. The revenue from the Lazy Bee Ranch was $137.70. Prepare a report showing the margin from this job. (Input all amounts as positive values except losses which should be indicated by a minus sign.Gore Range Carpet Cleaning Customer Margin-Activity-Based Costing $ Costs: $.

Reference no: EM13569721

Questions Cloud

Which of the following groups would be considered an : which of the following groups would be considered an internal user of financial statements?a bank reviewing a loan

Ethically dubious conduct please respond to the following : ethically dubious conduct please respond to the following from the case study assess the following items to determine

Problem 5-16 applying overhead in a service company lo2 lo3 : problem 5-16 applying overhead in a service company lo2 lo3 lo4 leeds architectural consultants uses a job-order

A venture capitalist facing two alternative investment : a venture capitalist facing two alternative investment opportunities. ensley company- variable cost per unit21.00 sales

Prepare the first-stage allocation of costs to the activity : gore range carpet cleaning is a family-owned business in eagle-vail colorado. for its services the company has always

Linden inc had the following note and interest receivable : linden inc. had the following note and interest receivable account balances at dec. 31 2012 note receivable from sale

See buffalo wild wing 2011 10-k report locate the statement : see buffalo wild wing 2011 10-k report locate the statement of management responsibility and the report of the

The threat of new entrants would be higher under which of : the threat of new entrants would be higher under which of the following conditions? access to distribution channels is

Determining break-even price in a reduce-or-expand decision : determining break-even price in a reduce-or-expand decision. quickcare is a health care franchise that functions as a

User Account

All Pages