Chapter5Solution

# Chapter5Solution - Excel Templates Chapter 5 Student Name...

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Excel Templates Chapter 5 Student Name: <Type your name here> Class: <Type your class here>

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Problem 5-22 Given Data Activity Activity Cost Pool: Measure Activity for the Year Cleaning carpets Square metres cleaned (00s) 10,000 hundred square metres Travel to jobs Kilometres driven 50,000 kilometres Job support Number of jobs 1,800 jobs Other (costs of idle capacity and None Not applicable organization-sustaining costs) Total cost of operating the company for the year: Wages \$140,000 Cleaning supplies 25,000 Cleaning equipment depreciation 10,000 Vehicle expenses 30,000 Office expenses 60,000 President's compensation 75,000 Total cost \$340,000 Distribution of Resource Consumption Across Activity Cost Pools Cleaning Travel to Job Carpets Jobs Support Other Totals Wages 75% 15% 0% 10% 100% Cleaning supplies 100% 0% 0% 0% 100% Cleaning equipment depreciation 70% 0% 0% 30% 100% Vehicle expenses 0% 80% 0% 20% 100% Office expenses 0% 0% 60% 40% 100% President's compensation 0% 0% 30% 70% 100% Part 3 information: Size of job (square metres) 600 Kilometres driven round trip 52 Part 4 information: Revenue earned \$137.70 Charged per 100 square metres 22.95
<Type your name here> <Type your class here> Excel Templates Chapter 5 Problem 5-22 Part 1 Activity Cost Pools Travel to jobs Job support Other Totals Wages \$105,000 \$21,000 \$-0- \$14,000 \$140,000 Cleaning supplies 25,000 -0- -0- -0- 25,000 Cleaning equipment depreciation 7,000 -0- -0- 3,000 10,000 Vehicle expenses -0- 24,000 -0- 6,000 30,000 Office expenses -0- -0- 36,000 24,000 60,000 President's compensation -0- -0- 22,500 52,500 75,000 Total cost \$137,000 \$45,000 \$58,500 \$99,500 \$340,000 Part 2 Activity Cost Pool Total Cost Total Activity Activity Rate Cleaning carpets \$137,000 10,000 \$13.70 Travel to job 45,000 50,000 kilometres 0.90 per kilometre Job support 58,500 1,800 jobs 32.50 per job Part 3 Job Cost - Grizzly Bear Ranch Activity Cost Pool Activity Rate Activity Volume Total Cost Cleaning carpets \$13.70 6 \$82.20 Travel to job 0.90 per kilometre 52 kilometres 46.80 Job support 32.50 per job 1 jobs 32.50 Total \$161.50 Part 4 Product Margin Sales \$137.70 Costs: Cleaning carpets \$82.20 Travel to job 46.80 Job support 32.50 Total costs 161.50 Product margin \$(23.80) Cleaning carpets hundred square metres per hundred square metres per hundred square metres hundred square metres

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Part 5 Part 6 Happy Valley Cleaning appears to be losing money on the Grizzly Bear Ranch job. However, caution is advised. Some of the costs may not be avoidable and hence would have been incurred even if the Grizzly Bear Ranch job had not been accepted. An action analysis (discussed in Appendix 5A) is a more appropriate starting point for analysis than the simple report in part (4) above. Nevertheless, there is a point at which travel costs eat up all of the profit from a job. With the company’s
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## This note was uploaded on 10/19/2010 for the course ACCOUNTING 341 taught by Professor Ken during the Spring '10 term at University of Guelph - Humber.

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Chapter5Solution - Excel Templates Chapter 5 Student Name...

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