Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Books and Brew (BB) is a large city bookstore that sells books and music CD's, and also has a cafe. Currently, BB uses a single-driver
Books and Brew (BB) is a large city bookstore that sells books and music CD's, and also has a cafe. Currently, BB uses a single-driver system allocate its operating costs to each of its three product lines, using the the number of items sold as the single cost driver. But BB's manageme is concerned that this allocation system may not be providing the best information for making a variety of pricing decisions. BB's operating co for 2018 were as follows: $455,000 $436,000 Purchasing department Receiving department Shelf-stocking employee salaries Cashiers and floor employee salaries $499,000 | $114,000 2018 information about BB's product lines is also available: Cafe Revenue Books $3,731,000 $2,670,000 CD's $2,487,000 $1,894,000 $ 755,000 Cost of merchandise $555,000 Number of purchase orders placed 2,660 2,420 2,080 Number of deliveries received 1,500 1,780 1,270 15,700 13,000 11,200 Hours of shelf stocking time Number of items sold 137,000 100,000 274,000 REQUIRED (ROUND ALLOCATION RATES TO THE NEAREST CENT AND ALLOCATIONS TO THE NEAREST DOLLAR.] Part A [6 tries; 5 points] Using BB's single-driver system to allocate its operating costs, how much was allocated to CD's in 2018? 556472 24Z7** i Tries 4/6 LAE Part B [6 tries; 5 points] If BB had used an activity-based costing system to allocate its operating costs in 2018, how much would have been allocated to the cafe? For cashiers and floor employee salaries, use number of items sold as the cost driver. For all other costs, the appropriate drivers should be clear
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started