Question

EXERCISE 7-2 First Stage Allocation LO7-2 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 activ- ity 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

	Travel	Pickup and Delivery	Customer Service	Other	Totals
Driver and guard wages..........................
Vehicle operating expense......................
Vehicle depreciation................................
Customer representative salaries and expenses..............................................
Office expenses......................................
Administrative expenses.........................
Total cost................................................	$628,000	$306,000	$417,000	$279,000	$1,630,000

Each entry in the table is derived by multiplying the total cost for the cost category by the percentage taken from the table below that shows the distribution of resource consumption:

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

Answer 1

	Travel	Pickup and delivery	Customer service	Other	Totals
Driver and guard wages	3,60,000.00	2,52,000.00	72,000.00	36,000.00	7,20,000.00
	=720000 * 50%	=720000 * 35%	=720000 * 10%	=720000 * 5%
Vehicle operating expense	1,96,000.00	14,000.00		70,000.00	2,80,000.00
	=280000 * 70	=280000 * 5%		=280000 * 25%
Vehicle depreciation	72,000.00	18,000.00		30,000.00	1,20,000.00
Customer representative salaries and expenses			1,44,000.00	16,000.00	1,60,000.00
Office expenses		6,000.00	9,000.00	15,000.00	30,000.00
Administrative expenses		16,000.00	1,92,000.00	1,12,000.00	3,20,000.00
Total cost	$628,000	$306,000	$417,000	$279,000	$1,630,000

Kindly do provide Feedback !!!