United Parcel Service, Inc. provides logistics services using operating costing. In June 2030, the company incurs the following operating costs related to its delivery services:

• Vehicle Maintenance: $15 million
• Delivery Personnel Costs: $20 million
• Fuel and Energy: $10 million
• Customer Support: $5 million
• Distribution Centers: $8 million
• Headquarters Overhead: $7 million

Required:

• Allocate operating costs to each service using the step-down allocation method.
• Determine the cost per package delivered assuming 100 million packages processed.
• Analyze the cost structure of operating costing in logistics services.
• Discuss the role of service cost allocation in cost management.
• Prepare an operating costing statement for United Parcel Service, Inc.