Gallatin Carpet Cleaning is a small, family-owned businessoperating out of Bozeman, Montana. For its services, the companyhas always charged a flat fee per hundred square feet of carpetcleaned. The current fee is $22.45 per hundred square feet.However, there is some question about whether the company isactually making any money on jobs for some customers—particularlythose located on remote ranches that require considerable traveltime. The owner’s daughter, home for the summer from college, hassuggested investigating this question using activity-based costing.After some discussion, she designed a simple system consisting offour activity cost pools. The activity cost pools and theiractivity measures appear below: Activity Cost Pool Activity MeasureActivity for the Year Cleaning carpets Square feet cleaned (00s)13,000 hundred square feet Travel to jobs Miles driven 143,500miles Job support Number of jobs 1,700 jobs Other(organization-sustaining costs and idle capacity costs) None Notapplicable The total cost of operating the company for the year is$346,000 which includes the following costs: Wages $ 143,000Cleaning supplies 22,000 Cleaning equipment depreciation 14,000Vehicle expenses 31,000 Office expenses 60,000 President’scompensation 76,000 Total cost $ 346,000 Resource consumption isdistributed across the activities as follows: Distribution ofResource Consumption Across Activities Cleaning Carpets Travel toJobs Job Support Other Total Wages 75 % 14 % 0 % 11 % 100 %Cleaning supplies 100 % 0 % 0 % 0 % 100 % Cleaning equipmentdepreciation 66 % 0 % 0 % 34 % 100 % Vehicle expenses 0 % 75 % 0 %25 % 100 % Office expenses 0 % 0 % 65 % 35 % 100 % President’scompensation 0 % 0 % 26 % 74 % 100 % Job support consists ofreceiving 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 costpools. 2. Compute the activity rates for the activity cost pools.3. The company recently completed a 400 square foot carpet-cleaningjob at the Flying N Ranch—a 58-mile round-trip journey from thecompany’s offices in Bozeman. Compute the cost of this job usingthe activity-based costing system. 4. The revenue from the Flying NRanch was $89.80 (400 square feet @ $22.45 per hundred squarefeet). Calculate the customer margin earned on this job.