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a) For many years, Sweet Trucking has allocated truck maintenance and repair (M&R) costs to its three divisions using a traditional basis of number of

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a) For many years, Sweet Trucking has allocated truck maintenance and repair (M&R) costs to its three divisions using a traditional basis of number of trucks traveling through repair centers within each region. The allocation, using a blanket IDC rate, is shown for last year when $2.31 million was allocated. Region Denver Albuquerque Oklahoma City Trucks 25,000 18,000 9,500 Rate $44/truck $44/truck 792,000 $44/truck 418,000 Allocation, $ 1,100,000 Alberto, the M&R supervisor for Sweet, wants to switch to the ABC method where the cost driver is a combination of load carried and age of trucks that pass through repair centers. The measure he recommends is total tonnage passing through a center times the average age of trucks passing through the center. Reallocate the $2.31 million using the data below and compare the center-by center allocation of traditional and ABC methods. Region Load Recorded, 1000 Tons 800 1200 2500 Average Truck Age, Years Denver Albuquerque Oklahoma City Determine load-age basis; rate (rounded) and allocation. 12.5 15.8 6.0

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