The Anderson Trucking Company has one service department and two regional operating departments. The budgeted cost behavior pattern of the service department is $675,000 monthly in fixed costs plus $0.85 per 1,000 ton-miles operated in the East and West regions. (Ton-miles are the number of tons carried times the number of miles traveled.) The actual monthly costs of the service department are allocated using ton-miles operated as the cost-allocation base. Read the requirements. Requirement 1. Anderson handled 500 million ton-miles of traffic in April, half in each operating region. The actual costs of the service department were exactly equal to those predicted by the budget for 500 million ton-miles. Compute the costs that would be allocated to each operating region on an actual ton-miles basis. (Round rates to three decimal places.) Allocation East West X Requirement 2. Suppose the East region was plagued by strikes, so that the amount of freight handled was much lower than originally anticipated. East moved only 120 million ton-miles of traffic. The West region handled 240 million ton-miles. The actual costs were exactly as budgeted for this lower level of activity. Compute the costs that would be allocated to East and West on an actual ton-mile basis. Note that the total costs will be lower. (Round rates to three decimal places.) Allocation East West X X Requirement 3. Refer to the facts in number 1. Various inefficiencies caused the service department to incur total costs of $1,225,000. Compute the costs to be allocated to East and West. Are the allocations justified? If not, what improvement do you suggest? (Round rates to three decimal places.) East West Are the allocations justified? If not, what improvement do you suggest? Such allocation seems Allocation because the operating departments to bear another department's cost of inefficiency. If the allocations are unjustified, select an improvement: Requirement 4. Refer to the facts in number 2. Assume that assorted investment outlays for equipment and space in the service department were made to provide a basic maximum capacity to serve the East region at a level of 378 million ton-miles and the West region at a level of 222 million ton-miles. Suppose fixed costs are allocated on the basis of this capacity to serve. Variable costs are allocated by using a predetermined standard rate per 1,000 ton-miles. Compute the costs to be allocated to each region. What are the advantages of this method over other methods? East West + + + Allocation The Anderson Trucking Company has one service department and two regional operating departments. The budgeted cost behavior pattern of the service department is $675,000 monthly in fixed costs plus $0.85 per 1,000 ton-miles operated in the East and West regions. (Ton-miles are the number of tons carried times the number of miles traveled.) The actual monthly costs of the service department are allocated using ton-miles operated as the cost-allocation base. Read the requirements. Requirement 1. Anderson handled 500 million ton-miles of traffic in April, half in each operating region. The actual costs of the service department were exactly equal to those predicted by the budget for 500 million ton-miles. Compute the costs that would be allocated to each operating region on an actual ton-miles basis. (Round rates to three decimal places.) Allocation East West x Requirement 2. Suppose the East region was plagued anticipated. East moved only 120 million ton-miles of tra Actual cost rate per thousand ton-mile budgeted for this lower level of activity. Compute the co: Actual ton-miles (in thousands) total costs will be lower. (Round rates to three decimal p uch lower than originally e actual costs were exactly as ial ton-mile basis. Note that the East West Budgeted ton-miles (in thousands) on Fixed costs Variable costs Requirement 3. Refer to the facts in number 1. Various Compute the costs to be allocated to East and West. Ar Variable rate per thousand ton-mile three decimal places.) otal costs of $1,225,000. you suggest? (Round rates to Allocation East West X Are the allocations justified? If not, what improvement do you suggest? Such allocation seems because the operating departments to bear another department's cost of inefficiency. If the allocations are unjustified, select an improvement: Requirement 4. Refer to the facts in number 2. Assume that assorted investment outlays for equipment and space in the service department were made to provide a basic maximum capacity to serve the East region at a level of 378 million ton-miles and the West region at a level of 222 million ton-miles. Suppose fixed costs are allocated on the basis of this capacity to serve. Variable costs are allocated by using a predetermined standard rate per 1,000 ton-miles. Compute the costs to be allocated to each region. What are the advantages of this method over other methods? East West + + + Allocation =