Problem 7-19 Evaluating the Profitability of Services (LO2, LO3, LO4) Kenosha Winter Services is a small family-owned snow-removal business. For its services, the company has always charged a flat 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 Square metres cleaned (ees) 36,855 hundred square metres Travel to Jobs Kilometres driven 26,650 kilometres Job support Number of jobs 500 jobs Other (casts of Idle capacity and organization-sustaining costs) Snow removal None NA The total cost of operating the company for the year is $397.500, which includes the following costs Wages Supplies Show removal equipment depreciation Vehicle expenses office expenses Presidents compensation Total cos $153.ee 40, see 20.500 40.500 51,00 32.000 5397,582 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption across Activity Cost Pools Snow Travel to Renoval Jobs Job Support Other Wages BOX 10% ex Supplies 10% 100% ex 0 es Snow removal equipment depreciation 85 ex ex 15% Vehicle expenses 0% 65% 0% 35% Office expenses ex 45% 55% President's compensation 85 35% 65% Total 100% 100% 100% 100% ?? 100% 100x 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 a O wherever it is required.) Snow Removal Travel to Jobs Job Support Other Total Wages Supplies Snow removal equipment depr Vehicle expenses Omce expenses President's compensation Total cost 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 per job 3. The company recently completed a 3,600 square metre snow removal Job at Hometown Hardware-a 76 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 4. The revenue from the Hometown Hardware job was $417.60 (3,600 square metres at $1160 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

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