Bus 630 Week 3 Dq 2 Profitability
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BUS 630 Week 3 DQ 2 Profitability
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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% |
Cleaning supplies | 100% | 0% | 0% | 0% | 100% |
Cleaning equipment depreciation | 80% | 0% | 0%...
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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% |
Cleaning supplies | 100% | 0% | 0% | 0% | 100% |
Cleaning equipment depreciation | 80% | 0% | 0%...