BUS 630 Week 3 DQ 2 Profitability
To Buy This material Click below link http://www.uoptutors.com/BUS-630/BUS-630-Week-3-DQ-2-Profitability Complete the following exercise and respond to at least two of your fellow students’ postings. 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 $28 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 | Activity Measure | Activity for the Year | Cleaning carpets | Square feet cleaned (00s) | 20,000 hundred | | | square feet | Travel to jobs | Miles driven | 60,000 miles | Job support | Number of jobs | 2,000 jobs | Other (costs of idle capacity and organization-sustaining costs) | None | Not applicable |
The total cost of operating the company for the year is $430,000, which includes the following costs: Wages | $ 150,000 | Cleaning supplies | 40,000 | Cleaning equipment depreciation | 20,000 | Vehicle expenses | 80,000 | Office expenses | 60,000 | President’s compensation | 80,000 | | $ 430,000 |
Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities | | | Cleaning | Travel to | Job | | | | Carpets | Jobs | Support | Other | Total | Wages | 70% | 20% | 0% | 10% | 100% |