Question
Assigning Costs to Activities, Resource Drivers The Receiving Department has three activities: unloading, counting goods, and inspecting. Unloading uses a forklift that is leased for
Assigning Costs to Activities, Resource Drivers
The Receiving Department has three activities: unloading, counting goods, and inspecting. Unloading uses a forklift that is leased for $18,000 per year. The forklift is used only for unloading. The fuel for the forklift is $2,500 per year. Other operating costs (maintenance) for the forklift total $3,500 per year. Inspection uses some special testing equipment that has depreciation of $4,000 per year and an operating cost of $500. Receiving has three employees who have an average salary of $35,000 per year. The work distribution matrix for the receiving personnel is as follows:
Activity | Percentage of Time on Each Activity |
Unloading | 40% |
Counting | 25% |
Inspecting | 35% |
No other resources are used for these activities.
Required:
1. Calculate the cost of each activity.
Unloading | $fill in the blank 1 |
Counting | $fill in the blank 2 |
Inspecting | $fill in the blank 3 |
2. Explain the two methods used to assign costs to activities.
When the resource is used only by one activity, then
direct tracingresource drivers
is possible. When the activities are shared, as in the case of labor, then
direct tracingresource drivers
must be used.
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