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The Chemical Free Clean Co ( C Co) provides a range of environmentally - friendly cleaning needs. Its services to business customers range from large, medium sized and small offices and factotn words at hospitals, where specialist cleaning equipment must be usicad a For xample.ll their range customers, often providing a specific service to meet a clients to specialist care adhered to C Co offers both regular cleaning contracts and contracts for one-off jobs. client was a chain of restaurants which employed them to provide an business premises after an outbreak of food poisoning. One of C Cos at ranches. For this service, the company has always charged a flat fee per is some questio carpet cleaned. The current fee is RM28 per hundred meters. However, there customers- about whether the company is actually making any money on jobs tor used and regulations a its latest extensive clean of all ther service is carpet eleaning particularly those located on remote ranches that required considerable director, has suggested investigating this question using activity- discussion, a simple system consisting of four activity cost pools activity cost pools and their activity measures appear below travel time. The finance based costing. After some seemed to be adequate. The Activity Cost Pool Cleaning carpets Travel to jobs Aetivity mensure Meters cleaned (00s) Kms driven Number of jobs Activity for the Year 20,000 hundred meters 60,000 Kms Job support 2,000 jobs Job support consists of receiving calls from potential customers at the home office, scheduling jobs. billing, resolving issues, and so on. The total cost of operating the company for the year is $430,000, which includes the following costs RM135.000 Wages 40,000 16,000 48,000 es. Cleaning equipment depreciation 27,000 32,000 Presidents compensation... RM298,000
Distribution Of Resource Consumption Travel To Carpets Support Total $105,000 $30,000 $135,00O 5 0 Cleaning supplies 40,000 16,000 48,000 27,000 32,000 16,000 Depreciation Vehicle expenses 48,000 Office expenses Presidents 27,000 32,000 TOTAL COST 5161,000 $78,000 $59,000 $298,000 Required: i. Compute the activity rates for the activity cost pools. 3 marks) The company recently completed a 500 meters carpet -cleaning j a 75- km round-trip journey from the companys offices in Kajang. Compute the cost of this job using the activity-based costing system. 5 marks) ii. The revenue from the flying N ranch was RM140 (5 hundred meters @ iv. What do you conclude concerning the profitability for the flying N ranch job? v. What advice would you give the president concerning pricing jobs in the future? RM28 per hundred meters). Prepare report showing the margin from this job. 4 marks) Explain 4 marks) (4 marks) Total: 20 Marks)
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