Alpine Township contracts with Dragoon Environmental Services (DES) to provide solid waste collection to households andbusinesses. Until recently, DES had an exclusive franchise to provide this service in Alpine, which meant that other waste collectionfirms could not operate legally in the township. The price per pound of waste collected was regulated at 24 percent above theaverage total cost of collection..Cost data for the most recent year of operations for DES are as follows:Administrative costOperating costs-trucksOther collection costs$ 480,0001,536,000384,000Data on customers for the most recent year are as follows:Households Businesses11,5202,8804,00012,000Number of customersWaste collected (tons)The Township Board of Alpine is considering allowing other private waste haulers to collect waste from businesses but not fromhouseholds. Service to businesses from other waste collection firms would not be subject to price regulation. Based on informationfrom neighboring cities, the price that other private waste collection firms will charge is estimated to be $0.05 per pound (= $100 perton).DES'S CEO has approached the board with a proposal to change the way costs are allocated to households and businesses, which willresult in different rates for households and businesses. The CEO proposes that administrative costs and truck operating costs beallocated based on the number of customers and the other collection costs be allocated based on pounds collected. The total costsallocated to households would then be divided by the estimated number of pounds collected from households to determine the cost.of collection. The rate would then be 24 percent above the cost. The rate for businesses would be determined using the samecalculation.Required:a. Based on cost data from the most recent year, what is the price per pound charged by DES for waste collection under the currentsystem (the same rate for both types of customers)?b. Based on cost and waste data from the most recent year, what would be the price per pound charged to households and tobusinesses by DES for waste collection if the CEO's proposal were accepted?Complete this question by entering your answers in the tabs below.Required A Required BBased on cost data from the most recent year, what is the price per pound charged by DES for waste collection under thecurrent system (the same rate for both types of customers)?Note: Do not round intermediate calculations. Round your answer to 3 decimal places.Price per poundShow Transcribed TextRequired A Required BBased on cost and waste data from the most recent year, what would be the price per pound charged to households and tobusinesses by DES for waste collection if the CEO's proposal were accepted?Note: Do not round intermediate calculations. Round your "Average allocated cost per pound" and "Price" answers to 4decimal places. Round your "Allocated cost per customer" and "Total allocated costs" answers to the nearest whole dollar.Show less AAllocated cost per customerAllocated cost per tonAllocated total customer costAllocated total other costTotal allocated costAverage allocated cost per poundPrice per poundHouseholds$0 $Businesses0

Cost allocation refers to the assignment of costs to specific cost objects. This may involve…

Alpine Township contracts with Dragoon Environmental Services (DES) to provide solid waste collection to households and businesses. Until recently, DES had an exclusive franchise to provide this service in Alpine, which meant that other waste collection firms could not operate legally in the township. The price per pound of waste collected was regulated at 24 percent above the average total cost of collection.

Alpine Township contracts with Dragoon Environmental Services (DES) to provide solid waste collection to households and businesses. Until recently, DES had an exclusive franchise to provide this service in Alpine, which meant that other waste collection firms could not operate legally in the township. The price per pound of waste collected was regulated at 24 percent above the average total cost of collection.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter14: Quality And Environmental Cost Management

Section: Chapter Questions

Problem 6CE: Pinter Company had the following environmental activities and product information: 1. Environmental...

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