As part of a study designed to compare hybrid and similarly equipped conventional vehicles, a group tested a variety of classes of hybrid and all-gas model cars and sport utility vehicles (SUVs). Suppose the following data show the miles-per-gallon rating obtained for two hybrid small cars, two hybrid midsize cars, two hybrid small SUVs, and two hybrid midsize SUVs; also shown are the miles per gallon obtained for eight similarly equipped conventional models.

At the α = 0.05 level of significance, test for significant effects due to class, type, and interaction.

Find the value of the test statistic for class. (Round your answer to two decimal places.)

Find the p-value for class. (Round your answer to three decimal places.)

p-value =

State your conclusion about class.

Because the p-value ≤ α = 0.05, class is not significant.Because the p-value > α = 0.05, class is significant.    Because the p-value > α = 0.05, class is not significant.Because the p-value ≤ α = 0.05, class is significant.

Find the value of the test statistic for type. (Round your answer to two decimal places.)

Find the p-value for type. (Round your answer to three decimal places.)

p-value =

State your conclusion about type.

Because the p-value > α = 0.05, type is significant.Because the p-value ≤ α = 0.05, type is significant.    Because the p-value > α = 0.05, type is not significant.Because the p-value ≤ α = 0.05, type is not significant.

Find the value of the test statistic for interaction between class and type. (Round your answer to two decimal places.)

Find the p-value for interaction between class and type. (Round your answer to three decimal places.)

p-value =

State your conclusion about interaction between class and type.

Because the p-value ≤ α = 0.05, interaction between class and type is not significant.Because the p-value ≤ α = 0.05, interaction between class and type is significant.    Because the p-value > α = 0.05, interaction between class and type is significant.Because the p-value > α = 0.05, interaction between class and type is not significant.

As part of a study designed to compare hybrid and similarly equipped conventional vehicles, a group tested a variety of classes of hybrid and all-gas model cars and sport utility vehicles (SUVs). Suppose the following data show the miles-per-gallon rating obtained for two hybrid small cars, two hybrid midsize cars, two hybrid small SUVs, and two hybrid midsize SUVs; also shown are the miles per gallon obtained for eight similarly equipped conventional models.

At the α = 0.05 level of significance, test for significant effects due to class, type, and interaction.

Find the value of the test statistic for class. (Round your answer to two decimal places.)___

Find the p-value for class. (Round your answer to three decimal places.)

p-value = ____

State your conclusion about class.

Because the p-value ≤ α = 0.05, class is significant.

Because the p-value > α = 0.05, class is not significant.    

Because the p-value ≤ α = 0.05, class is not significant.

Because the p-value > α = 0.05, class is significant.

Find the value of the test statistic for type. (Round your answer to two decimal places.)___

Find the p-value for type. (Round your answer to three decimal places.)

p-value = ____

State your conclusion about type.

Because the p-value > α = 0.05, type is not significant.

Because the p-value > α = 0.05, type is significant.    

Because the p-value ≤ α = 0.05, type is significant.

Because the p-value ≤ α = 0.05, type is not significant.

Find the value of the test statistic for interaction between class and type. (Round your answer to two decimal places.)___

Find the p-value for interaction between class and type. (Round your answer to three decimal places.)

p-value = ____

State your conclusion about interaction between class and type.

Because the p-value ≤ α = 0.05, interaction between class and type is significant.

Because the p-value > α = 0.05, interaction between class and type is significant.    

Because the p-value ≤ α = 0.05, interaction between class and type is not significant.

Because the p-value > α = 0.05, interaction between class and type is not significant.

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $23.40 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. 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:

The total cost of operating the company for the year is $352,000, which includes the following costs:

Resource consumption is distributed across the activities as follows:

Distribution of Resource Consumption Across Activities  

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.

2. Compute the activity Rates for the activity cost pools. (Round your answer to 2 decimal places)

3. The company recently completed a 4 hundred square foot carpet-cleaning job at the Flying N ranch—a 54.00-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system. (Round your intermediate and final answers to 2 decimal places.)

4. The revenue from the Flying N ranch was $93.60 (4 hundred square feet at $23.40 per hundred square feet). Prepare a report showing the margin from this job. (Round your intermediate calculations and final answers to 2 decimal places.)

Problem 7-20 Evaluating the Profitability of Services [LO7-2, LO7-3, LO7-4, LO7-5]

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $23.95 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below:

The total cost of operating the company for the year is $366,000 which includes the following costs:

Resource consumption is distributed across the activities as follows:

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.

2. Compute the activity rates for the activity cost pools.

3. The company recently completed a 800 square foot carpet-cleaning job at the Flying N Ranch—a 58-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system.

4. The revenue from the Flying N Ranch was $191.60 (800 square feet @ $23.95 per hundred square feet). Calculate the customer margin

numbers 1, 2, and 3 I got. I just cant find number 4. I always seem to have a hard time with customer margin! Thanks for all the help

As part of a study designed to compare hybrid and similarly equipped conventional vehicles, a group tested a variety of classes of hybrid and all-gas model cars and sport utility vehicles (SUVs). Suppose the following data show the miles-per-gallon rating obtained for two hybrid small cars, two hybrid midsize cars, two hybrid small SUVs, and two hybrid midsize SUVs; also shown are the miles per gallon obtained for eight similarly equipped conventional models.

At the α = 0.05 level of significance, test for significant effects due to class, type, and interaction.

Find the value of the test statistic for class. (Round your answer to two decimal places.)

Find the p-value for class. (Round your answer to three decimal places.)

p-value =

State your conclusion about class.

Because the p-value > α = 0.05, class is not significant.Because the p-value > α = 0.05, class is significant.    Because the p-value ≤ α = 0.05, class is significant.Because the p-value ≤ α = 0.05, class is not significant.

Find the value of the test statistic for type. (Round your answer to two decimal places.)

Find the p-value for type. (Round your answer to three decimal places.)

p-value =

State your conclusion about type.

Because the p-value > α = 0.05, type is significant.Because the p-value > α = 0.05, type is not significant.    Because the p-value ≤ α = 0.05, type is not significant.Because the p-value ≤ α = 0.05, type is significant.

Find the value of the test statistic for interaction between class and type. (Round your answer to two decimal places.)

Find the p-value for interaction between class and type. (Round your answer to three decimal places.)

p-value =

State your conclusion about interaction between class and type.

Because the p-value > α = 0.05, interaction between class and type is significant.Because the p-value > α = 0.05, interaction between class and type is not significant.    Because the p-value ≤ α = 0.05, interaction between class and type is not significant.Because the p-value ≤ α = 0.05, interaction between class and type is significant.

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $23.35 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. 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:

The total cost of operating the company for the year is $348,000, which includes the following costs:

Resource consumption is distributed across the activities as follows:

Distribution of Resource Consumption Across Activities

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.

2. Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.)

3. The company recently completed a 4 hundred square foot carpet-cleaning job at the Flying N ranch—a 58.00-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system. (Round your intermediate and final answers to 2 decimal places.)

4. The revenue from the Flying N ranch was $93.40 (4 hundred square feet at $23.35 per hundred square feet). Prepare a report showing the margin from this job. (Round your intermediate calculations and final answers to 2 decimal places.)

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $22.75 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below:

The total cost of operating the company for the year is $361,000 which includes the following costs:

Resource consumption is distributed across the activities as follows:

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.

2. Compute the activity rates for the activity cost pools. (Round your answers to 2 decimal places.)

3. The company recently completed a 600 square foot carpet-cleaning job at the Flying N Ranch—a 60-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system. (Round your intermediate calculations and final answer to 2 decimal places.)

4. The revenue from the Flying N Ranch was $136.50 (600 square feet @ $22.75 per hundred square feet). Calculate the customer margin earned on this job. (Round your intermediate calculations and final answers to 2 decimal places.)

Joe operates a business that locates and purchases specialized assets for clients, among other activities. Joe uses the accrual method of accounting but he doesn’t keep any significant inventories of the specialized assets that he sells. Joe reported the following financial information for his business activities during year 0.

Determine the effect of each of the following transactions on the taxable business income.

Required:

1. Joe has signed a contract to sell gadgets to the city. The contract provides that sales of gadgets are dependent upon a test sample of gadgets operating successfully. In December, Joe delivers $11,550 worth of gadgets to the city that will be tested in March. Joe purchased the gadgets especially for this contract and paid $8,550.
2. Joe paid $185 for entertaining a visiting out-of-town client. The client didn’t discuss business with Joe during this visit, but Joe wants to maintain good relations to encourage additional business next year.
3. On November 1, Joe paid $410 for premiums providing for $41,000 of “key man” insurance on the life of Joe’s accountant over the next 12 months.
4. At the end of year 0, Joe’s business reports $9,150 of accounts receivable. Based upon past experience, Joe believes that at least $2,030 of his new receivables will be uncollectible.
5. In December of year 0, Joe rented equipment to complete a large job. Joe paid $3,150 in December because the rental agency required a minimum rental of three months ($1,050 per month). Joe completed the job before year-end, but he returned the equipment at the end of the lease.
6. Joe hired a new sales representative as an employee and sent her to Dallas for a week to contact prospective out-of-state clients. Joe ended up reimbursing his employee $310 for airfare, $360 for lodging, and $260 for meals $160 (Joe provided adequate documentation to substantiate the business purpose for the meals). Joe requires the employee to account for all expenditures in order to be reimbursed.
7. Joe uses his BMW (a personal auto) to travel to and from his residence to his factory. However, he switches to a business vehicle if he needs to travel after he reaches the factory. Last month, the business vehicle broke down and he was forced to use the BMW both to travel to and from the factory and to visit work sites. He drove 125 miles visiting work sites and 48 miles driving to and from the factory from his home. Joe uses the standard mileage rate to determine his auto-related business expenses.
8. Joe paid a visit to his parents in Dallas over the Christmas holidays. While he was in the city, Joe spent $55 to attend a half-day business symposium. Joe paid $210 for airfare, $54 for meals during the symposium, and $23 on cab fare to the symposium.

  (For all the transactions, select "No Effect" from the dropdown if no change in the taxable business income and for part g, round your answer to whole number. Use standard mileage rate.)

Problem 7-20 Evaluating the Profitability of Services [LO7-2, LO7-3, LO7-4, LO7-5]

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $23.75 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below:

The total cost of operating the company for the year is $368,000 which includes the following costs:

Resource consumption is distributed across the activities as follows:

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.

2. Compute the activity rates for the activity cost pools.

3. The company recently completed a 600 square foot carpet-cleaning job at the Flying N Ranch—a 55-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system.

4. The revenue from the Flying N Ranch was $142.50 (600 square feet @ $23.75 per hundred square feet). Calculate the customer margin earned on this job.