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EXERCISE 7 2 First-Stage Allocation LO2 Vault On Wheels Corporation operates a fleet of armored cars that make scheduled pickups and deliveries for its customers in the Phoenix area The company

EXERCISE 7–2 First-Stage Allocation [LO2]

VaultOnWheels Corporation operates a fleet of armored cars that make scheduled pickups and deliveries for its customers in the Phoenix 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 deliver- ies 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 . . . . . . . . . . . . . . . . . . . . . . .

$   840,000

Vehicle operating expense . . . . . . . . . . . . . . . . . . . . .

270,000

Vehicle depreciation . . . . . . . . . . . . . . . . . . . . . . . . . .

150,000

Customer representative salaries and expenses . . . .

180,000

Office expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

40,000

Administrative expenses . . . . . . . . . . . . . . . . . . . . . . .

340,000

Total cost  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,820,000

 

The distribution of resource consumption across the activity cost pools is as follows:

 

 

 

 

 

Travel

Pickup and Delivery

 

Customer Service

 

 

 

Other

 

 

 

Totals

Driver and guard wages . . . . . . . . . . . . . .

40%

45%

10%

5%

100%

Vehicle operating expense . . . . . . . . . . . .

75%

5%

0%

20%

100%

Vehicle depreciation . . . . . . . . . . . . . . . . .

70%

10%

0%

20%

100%

Customer representative salaries

 

 

 

 

 

and expenses . . . . . . . . . . . . . . . . . . . .

0%

0%

85%

15%

100%

Office expenses . . . . . . . . . . . . . . . . . . . .

0%

25%

35%

40%

100%

Administrative expenses . . . . . . . . . . . . . .

0%

5%

55%

40%

100%

 

 

 

 

 

 

Required:

Complete the first-stage allocations of costs to activity cost pools as illustrated in Exhibit 7–5.

Jun 29 2020 View more View Less

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