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	$	1,200,000
Vehicle operating expense		630,000
Vehicle depreciation		510,000
Customer representative salaries and expenses		540,000
Office expenses		400,000
Administrative expenses		700,000
Total cost	$	3,980,000

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

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

	Travel		Pickup and Delivery		Customer Service		Other		Totals
Driver and guard wages	600000		420000		120000		60000		1200000
Vehicle operating expense	441000		31500		0		157500		630000
Vehicle depreciation	306000		76500		0		127500		510000
Customer representative salaries and expenses	0		0		486000		54000		540000
Office expenses	0		80000		120000		200000		400000
Administrative expenses	0		35000		420000		245000		700000
Total	1347000		643000		1146000		844000		3980000