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Each part of the problem is worth five points, and you get six tries per part. Books and Brew (BB) is a large city bookstore
Each part of the problem is worth five points, and you get six tries per part. Books and Brew (BB) is a large city bookstore that sells books and music CDs, and also has a cafe. Prior to this year, BB used a single driver system to allocate its operating costs to each of its three product lines, with the number of items sold as the single cost driver. But BB's management was concerned that this allocation system was not providing the best information for making its many pricing decisions. BB's budgeted operating costs for 2021 were as follows: $498,000 $401,000 Purchasing department Receiving department Shelf-stocking employee salaries Cashiers and floor employee salaries $489,000 $123,000 The following is budgeted 2021 information for BB's three product lines: Books CDs Cafe Revenue $743,000 $4,094,000 $2,997,000 $2,387,000 $1,828,000 2,410 Cost of merchandise Number of purchase orders placed Number of deliveries received $525,000 2,800 2,040 1,550 1,580 1,580 14,400 14,300 Hours of shelf stocking time Number of items sold 10,400 259,000 136,000 120,000 REQUIRED (ROUND ALLOCATION RATES TO TWO DECIMAL PLACES.] Part A [6 tries; 5 points] Using BB's traditional single-driver system to allocate its operating costs in 2021, how much would be allocated to CDs? 351,600 ! ! 161-3953 (2) Part B [6 tries; 5 points] If BB decided to use an activity-based costing system to allocate its operating costs in 2021, how much would be allocated to the cafe? For cashiers and floor employee salaries, use number of items sold as the cost driver; for the other three cost categories, it should be clear what the appropriate drivers are. ** Tries 0/6
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