SecuriCorp operates a fleet of armored cars that make scheduled pickups and deli
ID: 2426368 • 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 organization-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 and expenses Office expenses Administrative expenses $ 940,000 370,000 250,000 280,000 140,000 440,000 Total cost $ 2,420,000 The distribution of resource consumption across the activity cost pools is as follows: Pickup and Customer Diery ServiceOther 5% 25% 25% Totals 100% 100% Travel Driver and guard wages Vehicle operating expense Vehicle depreciation Customer representative salaries and expenses Office expenses Administrative expenses 10% 0% 0% 90% WY 60% 100% 100% 100% 100% 100% 70% 0% 0% 0% 5% 15% 0% 25% 10% 50% 35% 20% 5%Explanation / Answer
The first stage allocations of costs to activity cost pools are as follows:
Each entry in the table is derived by multiplying the total cost for the cost category by the percentage taken from the table above that shows the distribution of resource consumption.