Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Cost data for the most recent year of operations for Evergreen are as follows. Administrative cost Operating costs-trucks Other collection costs $ 406,000 1,310,000 326,000

image text in transcribed
image text in transcribed
image text in transcribed
Cost data for the most recent year of operations for Evergreen are as follows. Administrative cost Operating costs-trucks Other collection costs $ 406,000 1,310,000 326,000 Data on customers for the most recent year are as follows. Itouseholds Businesses Number of customers 12,600 4,200 Waste collected (tons) 4,600 13,200 The City Council of Imperial Falls is considering allowing other private waste haulers to collect waste from businesses, but not from households. Service to businesses from other waste collection firms would not be subject to price regulation. Based on information from neighboring cities, the price that other private waste collection firms will charge is estimated to be $0.04 per pound ($80 per ton). (1 ton = 2,000 pounds) Evergreen's CEO has approached the city council with a proposal to change the way costs are allocated to households and businesses, which will result in different rates for households and businesses. She proposes that administrative costs and truck operating costs be allocated based on the number of customers and the other collection costs be allocated based on pounds collected. The total costs allocated to households would then be divided by the estimated number of pounds collected from households to determine the cost of collection. The rate would then be 20 percent above the cost. The rate for businesses would be determined using the same calculation Required: a. Based on cost data from the most recent year, what is the price per pound charged by Evergreen for waste collection under the current system (the same rate for both types of customers)? b. Based on cost and waste data from the most recent year, what would be the price per pound charged to households and to businesses by Evergreen for waste collection if the CEO's proposal were accepted? Required A Required B Based on cost data from the most recent year, what is the price per pound charged by Evergreen for waste collection under the current system (the same rate for both types of customers)? (Do not round Intermediate calculations. Round your answer to 3 decimal places.) Price per pound Required A Required B Based on cost and waste data from the most recent year, complete the following table to determine the price per pound charged to households and to businesses by Evergreen for waste collection if the CEO's proposal were accepted? (Do not round intermediate calculations. Round your "Average allocated cost per pound" and "Price" answers to 4 decimal places. Round your "Allocated cost per customer" and "Total allocated costs" answers to the nearest whole dollar.) Show less Households Businesses Allocated cost per customer Total allocated cost Average allocated cost per pound Price

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing CPA Exam Review

Authors: Becker

1st Edition

1943628696, 978-1943628698

More Books

Students also viewed these Accounting questions