Reliable Transit, Inc. operates a taxi and courier company. The company offers three services: Taxi, Airport Shuttle, and Courier Delivery. The drivers perform all three services based on demand, which varies from day to day. For February 2005, joint costs including labor, fuel, depreciation, etc. were \(\$ 575,000\). All three services also incur their own separate costs. The revenues and separate costs of each service for February 2005 are the following:

Required:

(a) Using a computer spreadsheet program, prepare a schedule which allocates the joint costs of Reliable Transit, Inc. based on the revenues of each service, and again based on the net realizable values of each service.

(b) If you were the manager of Courier Services, which approach for allocating joint costs would you prefer? What justification would you give for using this approach?

Transcribed Image Text:

Revenues Separate Costs Taxi $500,400 35,150 Airport Shuttle $750,600 Courier Services 15,800 $225,000 61,000