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	$	1,160,000
Vehicle operating expense		590,000
Vehicle depreciation		470,000
Customer representative salaries and expenses		500,000
Office expenses		360,000
Administrative expenses		660,000
Total cost	$	3,740,000

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.

Answer 1

Answer-

Securi Corp
Activity costs pool
Activity	Travel	Pickup & delivery	Customer Service	Others	Total
	$	$	$	$	$
Driver & guard wages	1160000*50%= $580000	1160000*35%= $406000	1160000*10%= $116000	1160000*5%= $58000	1160000
Vechile operating expenses	$590000*70%= $413000	$590000*5%=$29500	0	$590000*25%= $147500	590000
Vechile depreciation	$470000*60%= $282000	$470000*15%= $70500	0	$470000*25%= $117500	470000
Customer representative salaries & expenses	0	0	$500000*90%= $450000	$500000*10%= $50000	500000
Office expenses	0	$360000*20%= $72000	$360000*30%= $108000	$360000*50%= $180000	360000
Administrative expenses	0	$660000*5%= $33000	$660000*60%= $396000	$660000*35%= $231000	660000
Total expenses	1275000	611000	1070000	784000	3740000