Exhibit 5B gives the cost to fill potholes with a ton of asphalt in each of the five districts. Those calculations assume that the activities are performed without any of the improvements that were discovered with the help of the activity-based costing (ABC) calculations. With the ABC information in hand, management and the people in street management improved the pothole-filling process. After the improvements, the unions and Bridget Anderson from KPMG agree that all costs of pothole-filling are covered by the figures in Exhibit 6. 

Calculate the cost of 1 ton of asphalt pothole-filling in the Northwest district after the pothole-filling process is improved. (Hint: The indirect cost pool in Exhibit 6 refers to the overhead costs in Exhibit 5B)

 

Exhibit 5B Activity C Labor (laborers) C Labor Overtime Pothole Filling Costs: 5 Districts, 1992 Actual (January-March) D Labor (truck drivers) D Labor Overtime E Labor (equipment oprs.) E Labor Overtime Supervisors Transp. Supervisors Personnel Costs Binder Cold Mix Hot Mix Special Mix Tack Direct Materials Costs Central Admin. Expense Central Operations Central Maintenance Facility Expense Fixed Assets Maintenance Admin. Operations Admin. Overhead Costs Cargo Van Crew Cab Crew: Cab Pick Up 86 Grader Hotbox Loader Paver Pick Up Mini Roller Roller VIB: 2 ton SAD SADA Sedan Tack Wagon TAD TADA Trailer Truck: 1 Ton Dump Truck: Patch 91 Unused Equipment Rolling Stock Costs TOTAL Cost per ton Northwest 23.75 0.40 151.91 4.52 37.72 2.33 36.24 41.52 $298.39 5.35 12.89 9.54 2.23 $30.01 86.31 33.05 29.92 12.59 0.95 15.03 15.72 $193.57 10.7 14.08 1.26 1.57 0.09 34.68 7.79 4.85 25.43 4.02 9.96 3.26 $117.69 $639.66 Northeast 16.18 1.54 105.37 5.90 52.36 3.57 27.28 51.78 $263.98 0.25 4.21 12.54 6.53 0.62 $24.15 78.03 29.88 27.05 24.46 0.48 13.59 14.22 $187.71 6.47 1.58 2.87 5.19 0.12 6.65 0.04 20.63 12.07 4.05 0.45 0.71 22.33 6.90 3.55 $93.61 $569.45 Center 39.12 0.73 166.18 7.56 12.67 0.50 28.12 15.67 $270.55 1.53 24.04 3.43 0.75 $29.75 75.07 44.42 26.03 13.65 0.72 13.07 13.68 $186.64 5.34 0.48 11.81 9.35 3.38 8.89 2.49 5.18 1.74 $48.66 $535.60 Southwest 20.80 0.60 93.44 3.07 9.96 3.57 27.66 9.32 $168.42 2.31 11.49 10.84 0.24 $24.88 44.21 26.16 14.12 3.97 0.51 7.08 7.41 $103.46 1.53 5.80 2.10 6.58 0.63 1.99 1.26 20.75 6.07 0.05 18.81 6.80 3.67 $76.04 $372.80 Southeast 9.14 0.33 59.48 2.20 13.02 1.30 13.90 15.93 $115.30 0.03 2.03 20.7 6.28 0.00 $29.04 33.11 12.68 11.48 4.46 0.34 5.77 6.03 $73.87 5.14 6.66 0.13 0.12 16.54 3.39 0.52 6.08 3.94 7.46 $49.98 $268.19