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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 $ 980,000 410,000 290,000 320,000 180,000 480,000 $2,660,000 The distribution of resource consumption across the activity cost pools is as follows: Pickup and Customer Travel Delivery Service Other Driver and guard wages 50% 35% 10% 5% Vehicle operating expense 70% 5% OX 25% Vehicle depreciation 60% 15% 0% 25% Customer representative salaries and expenses 0% OX 90% 10% office expenses 0% 20% 30% 50% Administrative expenses 0% 60% 35% Totals 100% 100% 100% 100% 100% 100% 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 Green Thumb Gardening is a small gardening service that uses activity-based costing to estimate costs for pricing and other purposes. The proprietor of the company believes that costs are driven primarily by the size of customer lawns, the size of customer garden beds, the distance to travel to customers, and the number of customers. In addition, the costs of maintaining garden beds depends on whether the beds are low maintenance beds (mainly ordinary trees and shrubs) or high maintenance beds (mainly flowers and exotic plants). Accordingly, the company uses the five activity cost pools listed below: Activity Cost Pool Activity Measure Caring for lawn Square feet of lawn Caring for garden beds-low maintenance Square feet of low maintenance beds Caring for garden beds-high maintenance Square feet of high maintenance beds Travel to jobs Miles Customer billing and service Number of customers The company already has completed its first stage allocations of costs and has summarized its annual costs and activity as follows: Activity Cost Pool Caring for lawn Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs Customer billing and service Estimated Overhead Cost Expected Activity $85, 880 190,000 square feet of lawn $ 38, 400 23,000 square feet of low maintenance beds $ 48,280 17,000 square feet of high maintenance beds $4,400 14,000 miles $ 9, 100 38 customers Required: Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places.) Required: Compute the activity rate for each of the activity cost pools. (Round your answers to 2 decimal places.) Activity Rate Activity Cost Pool Caring for lawn Caring for garden beds-low maintenance Caring for garden beds-high maintenance Travel to jobs Customer billing and service per square ft of lawn per square ft of low maintenance beds per square ft of high maintenance beds per mile per customer Klumper Corporation is a diversified manufacturer of industrial goods. The company's activity-based costing system contains the following six activity cost pools and activity rates: Activity Cost Pool Activity Rates Supporting direct labor $ 6 per direct labor-hour Machine processing $ 4 per machine-hour Machine setups $ 40 per setup Production orders $ 160 per order Shipments $ 110 per shipment Product sustaining $ 750 per product Activity data have been supplied for the following two products: Number of units produced per year Direct Labor-hours Machine-hours Machine setups Production orders Shipments Product sustaining Total Expected Activity K425 M67 200 2.000 975 30 2,800 20 19 3 19 3 38 3 3 3 Required: How much total overhead cost would be assigned to K425 and M67 using the activity-based costing system? K425 M67 Activity Cost Pool Supporting direct labor Machine processing Machine setups Production orders Shipments Product sustaining Total overhead cost Thermal Rising, Inc., makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider model, but also makes custom-designed paragliders. Management has designed an activity-based costing system with the following activity cost pools and activity rates: Activity Cost Pool Activity Rate Supporting direct labor $ 22 per direct labor-hour Order processing $ 184 per order Custon design processing $ 270 per custom design Customer service $ 428 per customer Management would like an analysis of the profitability of a particular customer, Big Sky Outfitters, which has ordered the following products over the last 12 months 13 Number of gliders Number of orders Number of custom designs Direct labor-hours per glider Selling price per glider Direct naterials cost per glider Standard Custom Model Design 3 2 3 3 29.50 32.00 $1,625 $2,320 $ 476 S 580 The company's direct labor rate is $18 per hour. Required: Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters. (Round your intermediate calculations and final answer to the nearest whole dollar amount. Loss amounts should be entered with a minus sign.) Required: Using the company's activity-based costing system, compute the customer margin of Big Sky Outfitters. (Round your intermediate calculations and final answer to the nearest whole dollar amount. Loss amounts should be entered with a minus sign.) Customer margin
