18

Assume a companys activity-based costing system included three expenses: Vehicle operating expenses, $300,000; Vehicle depreciation, $125,000; and Customer service salaries, $175,000. These costs were consumed by four activities as follows:

	Travel	Deliveries	Customer Service	Other	Total
Vehicle operating expenses	45%	40%	10%	5%	100%
Vehicle depreciation	40%	50%	0%	10%	100%
Customer service salaries	20%	30%	35%	15%	100%

How much total cost (including all three expenses) would be allocated to the Travel activity?

Multiple Choice

• $238,750

• $220,000

• $190,000

• $208,750

17

Assume a companys activity-based costing system includes three activities with the following activity rates:

Activity Cost Pool	Activity Rate
Travel	$ 2	per mile driven
Deliveries	$ 50	per delivery
Customer service	$ 22	per phone call

Two of the companys many customers include Customer A and Customer B. These two customers consumed the companys activities as follows:

	Total Expected Activity
	Customer A	Customer B
Travel (number of miles driven)	335	250
Deliveries (number of deliveries)	15	5
Customer service (number of phone calls)	20	12

How much cost would be assigned from the Travel activity to Customer A?

Multiple Choice

• $500

• $670

• $60

• $168

16

Assume a companys activity-based costing system includes three activities with the following activity rates:

Activity Cost Pool	Activity Rate
Travel	$ 2	per mile driven
Deliveries	$ 50	per delivery
Customer service	$ 22	per phone call

Two of the companys many customers include Customer A and Customer B. These two customers consumed the companys activities as follows:

	Total Expected Activity
	Customer A	Customer B
Travel (number of miles driven)	300	250
Deliveries (number of deliveries)	15	5
Customer service (number of phone calls)	20	12

If the company earned $2,110 in revenue serving Customer A, then what is the customer margin for this customer?

Multiple Choice

• $490

• $320

• $390

• $420