Question
SBA Company operates a fleet of delivery vehicles that makes scheduled pickups and deliveries for its customers in the Baltimore area. The company is implementing
SBA Company operates a fleet of delivery vehicles that makes scheduled pickups and deliveries for its customers in the Baltimore area. The company is implementing an activity based costing system that has four activity cost pools: Travel, Pickup and Delivery, Customer Service and Other. The activity measures are miles for the Travel cost pool, number of pickups and deliveries for the Pickup and Delivery cost pool, and number of customers for the Customer Service cost pool. The Other cost pool has no activity measure because it is an organization-0sustaining activity. The following costs will be assigned using the activity based costing system:
Driver and Guard Wages $1,680,000 Vehicle Operating Expense 540,000 Vehicle Depreciation 300,000 Customer reps salaries and expenses 360,000 Office expenses 80,000 Administrative expenses 680,000
Total : $3,640,000
The distribution of resource consumption across the activity cost pools is as follows:
Travel | Pickup and Delivery | Customer Service | Other | Total | |
Driver and Guard Wages | 40% | 45% | 10% | 5% | 100% |
Vehicle Operating Expenses | 75% | 5% | 0% | 20% | 100% |
Vehice Deprection | 70% | 10% | 0% | 20% | 100% |
Custoer Reps Salaries and Expenses | 0% | 0% | 85% | 15% | 100% |
Office Expenses | 0% | 25% | 35% | 40% | 100% |
Administrative Salaries | 0% | 5% | 55% | 40% | 100% |
1.)Complete the First Stage Allocations for these expenses.
2.) If the company had the following activity, complete the second state allocation.
a. Miles Driven 1,000,000 b. Pickups and Deliveries 4,500 c. Number of Customers 1,500
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