FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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SecuriCorp operates a fleet of armored cars that make scheduled pickups and deliveries in the Los Angeles area. The company is implementing an activity-based costing system that has four activity cost pools: Travel, Pickup and Delivery, Customer Service, and Other. The activity measures are miles for the Travel cost pool, number of pickups and deliveries for the Pickup and Delivery cost pool, and number of customers for the Customer Service cost pool. The Other cost pool has no activity measure because it is an organization-sustaining activity. The following costs will be assigned using the activity-based costing system:

Driver and guard wages $ 720,000
Vehicle operating expense   280,000
Vehicle depreciation   120,000
Customer representative salaries and expenses   160,000
Office expenses   30,000
Administrative expenses   320,000
Total cost $ 1,630,000

The distribution of resource consumption across the activity cost pools is as follows:

  Travel Pickup
and
Delivery
Customer
Service
Other Totals
Driver and guard wages 50 % 35 % 10 % 5 % 100 %
Vehicle operating expense 70 % 5 % 0 % 25 % 100 %
Vehicle depreciation 60 % 15 % 0 % 25 % 100 %
Customer representative salaries and expenses 0 % 0 % 90 % 10 % 100 %
Office expenses 0 % 20 % 30 % 50 % 100 %
Administrative expenses 0 % 5 % 60 % 35 % 100 %
 

Compute:

Complete the first stage allocations of costs to activity cost pools.

                                                                    pickup      customer

Driver and guard wages                   travel        delivery   service   other Total

vehicle operating expense

vehicle depreciation

customer representative salaries and exp

Office expenses

administrative expense

Total cost

 

 

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