SecuriCorp operates a fleet of armored cars that make scheduled pickups and deliveries in the Los Angeles area. The company is implementing an activity-based costing system with 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- sustaining activity. The following costs will be assigned using the activity-based costing system: Driver and guard wages Vehicle operating expense Vehicle depreciation Customer representative salaries and expenses office expenses Administrative expenses Total cost The distribution of resource consumption across the activity cost pools is as follows: Pickup and Delivery 35% Customer Service 10% 5% 15% 0% Driver and guard wages Vehicle operating expense Vehicle depreciation Customer representative salaries and expenses. Office expenses Administrative expenses $ 900,000 330,000 210,000 1 240,000 100,000 400,000 $ 2,180,000 Driver and guard wages Vehicle operating expense Vehicle depreciation Customer representative salaries and expenses Office expenses Required: Complete the first stage allocations of costs to activity cost pools. Administrative expenses Total cost Travel 50% 70% 60% 0% 0% 0% $ Travel 20% 5% Pickup and Delivery 0$ 0% 0% 0 $ 90% 30% 60% Customer Service Other 5% 25% 25% 10% 50% 35% 0 $ Totals 100% 100% 100% 100% 100% 100% Other $ 0 $ Totals 0 0 0 0 0 0 0
SecuriCorp operates a fleet of armored cars that make scheduled pickups and deliveries in the Los Angeles area. The company is implementing an activity-based costing system with 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- sustaining activity. The following costs will be assigned using the activity-based costing system: Driver and guard wages Vehicle operating expense Vehicle depreciation Customer representative salaries and expenses office expenses Administrative expenses Total cost The distribution of resource consumption across the activity cost pools is as follows: Pickup and Delivery 35% Customer Service 10% 5% 15% 0% Driver and guard wages Vehicle operating expense Vehicle depreciation Customer representative salaries and expenses. Office expenses Administrative expenses $ 900,000 330,000 210,000 1 240,000 100,000 400,000 $ 2,180,000 Driver and guard wages Vehicle operating expense Vehicle depreciation Customer representative salaries and expenses Office expenses Required: Complete the first stage allocations of costs to activity cost pools. Administrative expenses Total cost Travel 50% 70% 60% 0% 0% 0% $ Travel 20% 5% Pickup and Delivery 0$ 0% 0% 0 $ 90% 30% 60% Customer Service Other 5% 25% 25% 10% 50% 35% 0 $ Totals 100% 100% 100% 100% 100% 100% Other $ 0 $ Totals 0 0 0 0 0 0 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:SecuriCorp operates a fleet of armored cars that make scheduled pickups and deliveries in the Los Angeles area. The company is
implementing an activity-based costing system with 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-
sustaining activity. The following costs will be assigned using the activity-based costing system:
Driver and guard wages
Vehicle operating expense
Vehicle depreciation
Customer representative salaries and expenses
office expenses
Administrative expenses
Total cost
Driver and guard wages
Vehicle operating expense
Vehicle depreciation
Customer representative salaries and expenses
office expenses
The distribution of resource consumption across the activity cost pools is as follows:
Customer
Service
10%
0%
0%
90%
30%
60%
Administrative expenses
Driver and guard wages
Vehicle operating expense
Vehicle depreciation
Customer representative salaries and expenses
Office expenses
$ 900,000
330,000
210,000
Administrative expenses
Total cost
240,000
100,000
400,000
$ 2,180,000
$
Travel
50%
70%
60%
0%
Required:
Complete the first stage allocations of costs to activity cost pools
0%
0%
Pickup and
Delivery
35%
Travel
5%
15%
0%
0 $
20%
5%
Pickup and
Delivery
Customer
Service
0 $
Other
5%
25%
25%
10%
50%
35%
0
$
Totals
100%
100%
100%
100%
100%
100%
Other
0
$
$
Totals
0
10
0
0
0
10
10
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