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 $ 1,100,000
Vehicle operating expense 530,000
Vehicle depreciation 410,000
Customer representative salaries and expenses 440,000
Office expenses 300,000
Administrative expenses 600,000
Total cost $ 3,380,000

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.

Homework Answers

Answer #1

Solution

Travel Pickup and Delivery Customer Service Other Total
Driver and guard wages $ 550,000 $ 385,000 $ 110,000 $ 55,000 $ 1,100,000
Vehicle Operating Expenses $ 371,000 $ 26,500 $ 0 $ 132,500 $ 530,000
Vehicle Depreciation $ 246,000 $ 61,500 $ 0 $ 102,500 $ 410,000
Customer Representative salaries and expenses $ 0 $ 0 $ 396,000 $ 44,000 $ 440,000
Office Expenses $ 0 $ 60,000 $ 90,000 $ 150,000 $ 300,000
Administrative Expenses $ 0 $ 30,000 $ 360,000 $ 210,000 $ 600,000
Total Cost $ 1,167,000 $ 563,000 $ 956,000 $ 694,000 $ 3,380,000
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