SecuriCorp operates a fleet of armored cars that make scheduled pickups and deli
ID: 2653325 • 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 $ 1,180,000
Vehicle operating expense 610,000
Vehicle depreciation 490,000
Customer representative salaries and expenses 520,000
Office expenses 380,000
Administrative expenses 680,000
Total cost $ 3,860,000
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 %
Required:
Complete the first stage allocations of costs to activity cost pools.
Explanation / Answer
Ans
Resource Consumption Travel Pickup and Delivery Customer Service Other Total Driver and guard wages 50.00 35.00 10.00 5.00 100.00 Vehicle operating expense 70.00 5.00 - 25.00 100.00 Vehicle depreciation 60.00 15.00 - 25.00 100.00 Customer representative salaries and expenses - - 90.00 10.00 100.00 Office expenses - 20.00 30.00 50.00 100.00 Administrative expenses - 5.00 60.00 35.00 100.00 Allocation to Cost Pools Travel Pickup and Delivery Customer Service Other Resource Consumption Driver and guard wages 11,80,000.00 5,90,000.00 4,13,000.00 1,18,000.00 59,000.00 Vehicle operating expense 6,10,000.00 4,27,000.00 30,500.00 - 1,52,500.00 Vehicle depreciation 4,90,000.00 2,94,000.00 73,500.00 - 1,22,500.00 Customer representative salaries and expenses 5,20,000.00 - - 4,68,000.00 52,000.00 Office expenses 3,80,000.00 - 76,000.00 1,14,000.00 1,90,000.00 Administrative expenses 6,80,000.00 - 34,000.00 4,08,000.00 2,38,000.00 Total Cost Pool 38,60,000.00 13,11,000.00 6,27,000.00 11,08,000.00 8,14,000.00