John's Custom Computer Shop (JCCS) assembles computers for both individual and corporate customers The company is organized into two divisions: Personal and Business. Once a computer is built, it is shipped to the customer. Billing for all customers is handled by the corporate Accounts Receivable Department. Accounts Receivable performs two major activities: billing and dispute resolution Billing refers to preparing and sending the bills as well as processing the payments. Dispute resolution occurs when a customer refuses to pay, usually due to an error in biling The costs of the Accounts Receivable Department are allocated to the two divisions based on the number of bills prepared. Kyle, the manager of the Business division, has complained that the allocated costs from Accounts Receivable are beginning to make the business division look unprofitable and has asked you to recommend some changes to the allocation system. If he agrees with your recommendation, he will pass them on to the chief financial officer Data on costs and activities in the Accounts Receivable Department follow Personal Number: Els prepared Number of disputes see Business 488 12 Total 1, eee 72 se The Accounts Receivable Department incurred the following costs during the year. Balling Bitnesolution Total $48.00 36,00 584 Required: a. Under the current allocation system, what is the cost that will be allocated from Accounts Receivable to Personal? To Business? b. Suppose the company Implements an activity-based cost system for Accounts Receivable with two activites, billing and dispute resolution. What is the cost that will be allocated from Accounts Recevable to Personat? To Business? Use the number of blits prepared as the cost driver for biting costs and the number of disputes for dispute resolution Costs Complete this question by entering your answers in the tabs below. Required A Required B Under the current allocation system what is the cost that will be allocated from Accounts Receivable to personal Business? Personal Business Allocated costs Required B > Complete this question by entering your answers in the tabs below. Required A Required B Suppose the company implements an activity-based cost system for Accounts Receivable with two activities, bill dispute resolution. What is the cost that will be allocated from Accounts Receivable to Personal? To Business? Us of bills prepared as the cost driver for billing costs and the number of disputes for dispute resolution costs. Personal Business Billing Dispute resolution