Question

SecuriCorp operates a fleet of armored cars that make scheduled pickups and deliveries in the Los...

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 $ 920,000
Vehicle operating expense 350,000
Vehicle depreciation 230,000
Customer representative salaries and expenses 260,000
Office expenses 120,000
Administrative expenses 420,000
Total cost $ 2,300,000

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.

Pickup and Customer
Travel Delivery Service Other Totals
Driver and guard wages
Vehicle operating expense
Vehicle depreciation
Customer representative salaries and expenses
Office expenses
Administrative expenses
Total cost

Homework Answers

Answer #1

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

Pickup and Customer
Travel Delivery Service Other Totals
Driver and guard wages 460000 322000 92000 46000 920000
Vehicle operating expense 245000 17500 0 87500 350000
Vehicle depreciation 138000 34500 0 57500 230000
Customer representative salaries and expenses 0 0 234000 26000 260000
Office expenses 0 24000 36000 60000 120000
Administrative expenses 0 21000 252000 147000 420000
Total Cost 843000 419000 614000 424000 2300000
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