Question
The accounting department of a large limousine company is analyzing the costs of its services. The cost data and level of activity for the past
The accounting department of a large limousine company is analyzing the costs of its services. The cost data and level of activity for the past 16 months follow:
Month | Special Analyses | Customer Accounts | Paychecks Processed | Accounting Service Costs | |||||||
1 | 0 | 150 | 1,270 | $ | 60,600 | ||||||
2 | 4 | 150 | 1,020 | 61,000 | |||||||
3 | 4 | 260 | 1,290 | 59,700 | |||||||
4 | 3 | 320 | 1,200 | 59,200 | |||||||
5 | 3 | 180 | 910 | 60,300 | |||||||
6 | 3 | 210 | 970 | 60,600 | |||||||
7 | 3 | 310 | 1,210 | 61,200 | |||||||
8 | 4 | 220 | 1,000 | 61,900 | |||||||
9 | 1 | 340 | 990 | 60,600 | |||||||
10 | 3 | 240 | 1,250 | 59,900 | |||||||
11 | 1 | 210 | 850 | 59,900 | |||||||
12 | 3 | 340 | 1,030 | 59,000 | |||||||
13 | 1 | 160 | 1,100 | 58,200 | |||||||
14 | 1 | 220 | 890 | 61,200 | |||||||
15 | 0 | 170 | 1,250 | 60,800 | |||||||
16 | 0 | 200 | 920 | 58,500 | |||||||
Totals | 34 | 3,680 | 17,150 | $ | 962,600 | ||||||
In addition to the above information, you learn that the accounting department had the following total costs for the past 16 months for each of the following:
Total cost of paychecks processed | $ | 190,365 | |
Total cost of maintaining customer accounts | 111,136 | ||
Total cost of performing special analyses | 133,620 | ||
Total fixed costs (total for 16 months) | 527,479 | ||
Total costs | $ | 962,600 | |
Required:
a-1. What is the cost per unit for paychecks processed? (Round your answer to 2 decimal places.)
a-2. What is the cost per unit for customer accounts maintained? (Round your answer to 2 decimal places.)
a-3. What is the cost per unit for special analyses performed?
b. Assuming the following level of cost-driver volumes for a month, what are the accounting department's estimated costs of doing business using the account analysis approach? (Round "Unit cost" to 2 decimal places. Round "Average fixed cost" to the nearest whole dollar amount.)
960 paychecks processed.
170 customer accounts maintained.
3 special analyses.
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