80.2K

Verified Solution

Link Copied!

Kenosha Winter Services is a small, family owned snow-removal business. For its services, the company has always charged a lot fee per hundred square metres of snow removal. The current fee is $11.60 per hundred square metres. 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 properties that require considerable travel time. The owner's daughter, home from school for the summer, has suggested Investigating this question using ABC. 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 Snow removal Square metres cleaned (000) 19,050 hundred square metres Travel to jobs Kilometres driven 16,875 kilometres Job support Number of Jobs 400 jobs Other (costs of idle capacity and organization sustaining costs) None NA The total cost of operating the company for the year is $465,000, which includes the following costs. Wages Supplies Snow removal equipment depreciation Vehicle expenses orfice expenses President's compensation Total cost $180, 45,000 25,000 45.00 70,000 100,000 $465,000 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption across Activity Cost Pools Travel to Jobs Job Support Other Snow Kemoval Total Resource consumption is distributed across the activities as follows: Wages Supplies Snow removal equipment depreciation Vehicle expenses office expenses President's compensation Show Removal BOX 100% BSX ON ox OX Distribution of resource Consumption across Activity Cost Pools Travel to Jobs Job Support Other 10% 10% 03 ox ox OK ox 158 65% 155 ex 45% 55 35% 65% Total 100% 100% 100% TOON 100% 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 (Do not leave any empty spaces; input o O wherever it is required.) Travel to Jobs Snow Removal Job Support Other Total 0 0 0 Wapos Supplies Snow removal equipmont depr Vehiclo expenses Office expenses President's compensation Total cost 0 0 0 OS 0 $ 01 2. Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.) Activity Cost Pool Snow removal Travel to jobs Job support Activity Rate per hundred square metres per kilometre por job 3. The company recently completed a 4,500 square metre snow removal job at Hometown Hardware-a 85 kilometre round-trip journey from Kenosha's offices. Compute the cost of this job using the ABC system (Round your answers to 2 decimal places.) ABC Cost Activity Cost Pool Snow removal Travel to jobs Job support Total $ 000 4. The revenue from the Hometown Hardware job was $522.00 (4,500 square metres at $11.60 per hundred square metres). Prepare a report showing the margin from this job. (Round your answers to 2 decimal places.) Sales Costs Snow removal Travel to jobs Job support Product margin 0.00 $ 000

Answer & Explanation Solved by verified expert

See Answer