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In: AccountingGallatin Carpet Cleaning is a small, family-owned businessoperating out of Bozeman, Montana. For its services,...Gallatin Carpet Cleaning is a small, family-owned businessoperating out of Bozeman, Montana. For its services, the companyhas always charged a flat fee per hundred square feet of carpetcleaned. The current fee is $22.30 per hundred square feet.However, there is some question about whether the company isactually making any money on jobs for some customers—particularlythose located on remote ranches that require considerable traveltime. The owner’s daughter, home for the summer from college, hassuggested investigating this question using activity-based costing.After some discussion, she designed a simple system consisting offour activity cost pools. The activity cost pools and theiractivity measures appear below:Activity Cost PoolActivity MeasureActivity for theYearCleaning carpetsSquare feet cleaned (00s)12,000hundred square feetTravel to jobsMiles driven256,000milesJob supportNumber of jobs1,800jobsOther (organization-sustainingcosts and idle capacity costs)NoneNot applicableThe total cost of operating the company for the year is $357,000which includes the following costs:Wages$146,000Cleaning supplies22,000Cleaning equipmentdepreciation19,000Vehicle expenses33,000Office expenses57,000President’s compensation80,000Total cost$357,000Resource consumption is distributed across the activities asfollows:Distribution ofResource Consumption Across ActivitiesCleaning CarpetsTravel to JobsJob SupportOtherTotalWages74%16%0%10%100%Cleaning supplies100%0%0%0%100%Cleaning equipmentdepreciation68%0%0%32%100%Vehicle expenses0%81%0%19%100%Office expenses0%0%64%36%100%President’s compensation0%0%30%70%100%Job support consists of receiving calls from potential customersat the home office, scheduling jobs, billing, resolving issues, andso on.Required:1. Prepare the first-stage allocation of costs to the activitycost pools.2. Compute the activity rates for the activity cost pools.3. The company recently completed a 800 square footcarpet-cleaning job at the Flying N Ranch—a 55-mile round-tripjourney from the company’s offices in Bozeman. Compute the cost ofthis job using the activity-based costing system.4. The revenue from the Flying N Ranch was $178.40 (800 squarefeet @ $22.30 per hundred square feet). Calculate the customermargin earned on this job.