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 $960,000
Vehicle operating expense 390,000
Vehicle depreciation 270,000
Customer representative salaries and expenses 300,000
Office expenses 160,000
Administrative expenses 460,000
Total cost $2,540,000

The distribution of resource consumption across the activity cost pools is as follows:

Travel Pickup and Delivery Customer Service Other Totals

50% 35% 10% 5% 100%
70% 5% 0% 25% 100%
60% 15% 0% 25% 100%
0% 0% 90% 10% 100%
0% 20% 30% 50% 100%
0% 5% 60% 35% 100%

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

Answer 1

attached below is the table showing the first stage of allocations of cost to activity

Step-by-step explanation:

The first stage of allocations of cost to activity cost pools

is calculated by :

( percentage cost of distribution ) * ( cost assigned )

1) Driver and Guards wages

Travel = 960000 * 50% = $480000

pickup and delivery = 960000 * 35% = $336000

customer service = 960000 * 10% = $96000

other = 960000 * 5% = $48000

Total = $960000

2) Vehicle operating expense

Travel = 390000 * 70% = 273000

pickup and delivery = 390000 * 5% = 19500

customer service = 390000 * 0% = 0

other = 390000 * 25% = 97500

Total = $390000

3) vehicle depreciation

Travel = 270000 * 60% = 162000

Pickup and delivery = 270000 * 15% = 40500

customer service = 270000 * 0% = 0

other = 270000 * 25% = 67500

Total = $270000

4) customer rep salaries and expenses

Travel = 300000 * 0 % = 0

pickup and delivery = 300000 * 0% = 0

customer service = 300000 * 90% = 270000

other = 300000 * 10% = 30000

Total = $300000

5) office expenses

travel = 160000 * 0% = 0

pickup and delivery = 160000 * 20% = 32000

customer service = 160000 * 30% = 48000

other = 160000 * 50% = $80000

Total = $160000

6) Administrative expenses

Travel = 460000 * 0% = 0

pickup and delivery = 460000 * 5% = 23000

customer service = 460000 * 60% = 276000

other = 460000 * 35% = 161000

total = $460000