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 Vehicle operating expense Vehicle depreciation Customer representative salaries and expenses Office expenses Administrative expenses Total cost 920,000 350,000 230,000 260,000 120,000 420,000 $ 2,300,000 The distribution of resource consumption across the activity cost pools is as follows: Pickup and Customer Delivery Service 35% 10% Travel 50% 70% 60% 5% ex 15% Driver and guard wages Vehicle operating expense Vehicle depreciation Customer representative salaries and expenses Office expenses Administrative expenses ox 90% 30% 60% Other 5% 25% 25% 103 50% 35% Totals 100% 100% 100% 100% 100% 100% 20% 5% Required: Complete the first stage allocations of costs to activity cost pools. Pickup and Delivery Customer Service Travel Other Totals Driver and guard wages Vehicle operating expense Vehicle depreciation Customer representative salaries and expenses Office expenses Administrative expenses Total cost

Answer 1

First Stage Allocation
Travel			Pickup		Customer		Other		Totals
			and		Service
			Delivery
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	%
	Travel		Pick up & Delivery		Customer Servcie		Other		Totals
	% ( e)	$ (axe)	% (d)	$ (aXd)	% (c )	$ (axc)	% (b)	$ (axb)	$ (a)	%
Driver and guard wages	50%	$460,000	35%	$322,000	10%	$92,000	5%	$46,000	$920,000	100	%
Vehicle operating expense	70%	$245,000	5%	$17,500	0%	$0	25%	$87,500	$350,000	100	%
Vehicle depreciation	60%	$138,000	15%	$34,500	0%	$0	25%	$57,500	$230,000	100	%
Customer representative salaries and expenses	0%	$0	0%	$0	90%	$234,000	10%	$26,000	$260,000	100	%
Office expenses	0%	$0	20%	$24,000	30%	$36,000	50%	$60,000	$120,000	100	%
Administrative expenses	0%	$0	5%	$21,000	60%	$252,000	35%	147000	$420,000	100	%