SecuriCorp operates a fleet of armored cars that make scheduled pickups and deli
ID: 2405380 • Letter: S
Question
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 organizatión-sustaining activity. The following costs will be assigned using the activity-based costing system: Driver and guard wages Vehicle operating expense Vehicle depreciation Customer representative salaries 1,060,000 490,000 370,000 400,000 and expenses Office expenses 260,000 560,000 Administrative expensers Total cost $3,140,000 The distribution of resource consumption across the activity cost pools is as follows: Pickup andCustomer 35 15% Travel Delivery Service Other Totals 100% 50% 70% 60% Driver and guard vages 5 1001 100% 25 0N 08 25% 10% 508 358 Vehicle depreelation Custoner representative salaries and expenses office expenses Adninistrative expenses 0% 0% oe 20% 5% 909 30 60% 100% 1008 1008 Required:Explanation / Answer
The first stage allcoation of cost to activity cost pools
Pickup and Customer Travel Delivery Service Other Totals Driver abd guard wages 530000 371000 106000 53000 1060000 Vehicle operating expense 343000 24500 0 122500 490000 Vehicle depreciation 222000 55500 0 92500 370000 Customer representative salaries and expenses 0 0 360000 40000 400000 office expenses 0 52000 78000 130000 260000 Administrative expenses 0 28000 336000 196000 560000 Total cost 1095000 531000 880000 634000 3140000