Question

The customer support department at wadsworth supply is analyzing the costs of its services. A cost analyst has collected monthly data on the three main functions of the department and the total costs for the last year, which follow. month special reports completed customer accounts maintained transactions processed customer support costs ($000) 1 28 2,810 86,640 $ 1,386 2 20 2,651 66,740 1,488 3 50 2,612 73,040 1,390 4 34 1,846 51,080 1,336 5 32 1,978 51,730 1,345 6 38 1,870 46,210 1,126 7 38 1,156 30,270 1,130 8 53 1,087 27,140 1,196 9 23 1,319 30,990 1,080 10 29 2,575 68,620 1,376 11 15 1,861 51,860 1,226 12 40 1,935 50,680 1,232 totals 400 23,700 635,000 $ 15,311. The cost analyst also has identified the customer support department costs for each of the three main functions. Any costs not assigned to one of the functions is considered general administration cost. The costs for the last year (in thousands) follow: total cost of special reports $ 5,046 total cost of maintaining customer accounts 4,266 total cost of processing transactions 2,159 required:

What is the cost per unit for special reports completed?
A) $12.615
B) $16.860
C) $14.695
D) $13.190

What is the cost per unit for customer accounts maintained?
A) $0.179
B) $0.180
C) $0.183
D) $0.178
What is the cost per unit for transactions processed?
A) $0.039
B) $0.040
C) $0.038
D) $0.037
Assuming the following level of cost-driver volumes for a month, what are the accounting department's estimated costs of doing business using the account analysis approach?
40 special reports
2,500 customer accounts maintained
55,000 transactions processed
A) $2,932.70
B) $3,150.50
C) $3,085.80
D) $2,750.90

Answer 1

The cost per unit for special reports completed is $12.615 thousand, for customer accounts maintained is $0.180 thousand, and for transactions processed is $0.034 thousand. The estimated total cost of doing business using the account analysis approach is $2,824.60 thousand.

Step-by-step explanation:

In order to find the cost per unit for special reports completed, we need to divide the total cost of special reports by the number of special reports completed. The total cost of special reports is $5,046 thousand and the number of special reports completed is 400. Therefore, the cost per unit for special reports completed is $5,046 / 400 = $12.615 thousand.

To find the cost per unit for customer accounts maintained, we need to divide the total cost of maintaining customer accounts by the number of customer accounts maintained. The total cost of maintaining customer accounts is $4,266 thousand and the number of customer accounts maintained is 23,700. Therefore, the cost per unit for customer accounts maintained is $4,266 / 23,700 = $0.180 thousand.

To find the cost per unit for transactions processed, we need to divide the total cost of processing transactions by the number of transactions processed. The total cost of processing transactions is $2,159 thousand and the number of transactions processed is 635,000. Therefore, the cost per unit for transactions processed is $2,159 / 635,000 = $0.034 thousand.

Using the account analysis approach, the accounting department's estimated costs of doing business can be calculated by multiplying the cost per unit for each function by the corresponding level of cost-driver volumes. For example, for 40 special reports, the estimated cost is $12.615 * 40 = $504.60 thousand. Similarly, for 2,500 customer accounts maintained, the estimated cost is $0.180 * 2,500 = $450 thousand. And for 55,000 transactions processed, the estimated cost is $0.034 * 55,000 = $1,870 thousand. Adding these estimated costs together, the accounting department's total estimated cost of doing business is $504.60 + $450 + $1,870 = $2,824.60 thousand.