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First-Stage Allocations to Activity Cost Pools Activity Cost Pools Cleaning Carpets Salaries Cleaning Materials Cleaning Equipment depreciation Auto Expenditures Office Expenditures President's Compensation Total $ 105,000 $ 40,000 $ 16,000 $ $ $ Travel to Jobs $ $ $ $ $ $ $ 30,000 48,000 78,000 Job Support Other $ $ $ Total 150,000 40,000 20,000 80,000 60,000 80,000 430,000
$ 15,000 $ $ - $ $ 4,000 $
$ - $ 32,000 $ $ 27,000 $ 33,000 $ $ 32,000 $ 48,000 $ $ 59,000 $ 132,000 $
2 Computation of Activity Rates Activity Cost Pools Total Cost Total Activity Cleaning Carpets $ 161,000 20,000 100 sq. ft Travel to Jobs $ 78,000 60,000 miles Job Support $ 59,000 2,000 jobs Other $ 132,000 Not Applicable
Activity Rate $ 8.05 per 100 sq. ft. $ 1.30 per mile $ 29.50 per job Not Applicable
3 Costs to Flying N Ranch Activity Cost Pools Activity Rate Cleaning Carpets $ 8.05 per 100 sq. ft. Travel to Jobs $ 1.30 per mile Job Support $ 29.50 per job Total Expenditures Assigned to Flying N Ranch
Activity 5100 sq. ft 75miles 1job
ABC Cost $ 40.25 $ 97.50 $ 29.50 $ 167.25
81 margin to cover their fixed overhead expenses as well as a profit. It is to be used as a guide or a reference in order for you to complete your own work . An illustration would be expense plus 25% which in the case of the Flying N Ranch would be ($167.25 Customer Margin $ (27.25 Travel to Jobs $ 97.50 $ 167. This would enable the organization to cover costs and add a markup to cover fixed expenses and profit. Please note the following: This tutorial will be used as such.4 Customer Margin -.Activity Based Costing Flying N Ranch Sales $ 140.25 x 1.25) $209.e. (This is just an illustration percentage markup).00 Costs: Cleaning Carpets $ 40.50 Job Support $ 29. It would cost more to do the job compared to the revenue received for the job.25) 5 The Flying N Ranch job would be a loss. for that reason the organization would actually being paying out money to do this job (i. a loss). 6 I would propose to the president that he modify his pricing model to an activity-based costing system.06 which would give the organization a $41.
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