Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
image text in transcribed
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 biling 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 billing 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 Business Total Number of bills prepared 550 350 900 Number of disputes 55 15 70 The Accounts Receivable department incurred the following costs during the year Billing Dispute resolution Total $ 40,500 35.000 $ 75.500 Required: a. Under the current allocation system, what is the cost that will be allocated from Accounts Receivable to Personal? To Business? (Do not round Intermediate calculations.) Personal Business Allocated costs b. Suppose the company implements an activity-based cost system for Accounts Receivable with two activities, billing and dispute resolution. What is the cost that will be allocated from Accounts Receivable to Personal? To Business? Use the number of bills prepared as the cost driver for biling costs and the number of disputes for dispute resolution costs Personal Business Biling Dispute resolution

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 Concepts For A Changing Environment

Authors: Larry E. Rittenberg, Bradley J. Schwieger

5th Edition

0324223102, 978-0324223101

More Books

Students also viewed these Accounting questions

Question

=+ How to send email messages from your application

Answered: 1 week ago

Question

virtual machine system Address Translation

Answered: 1 week ago