D. Walid Corporation operates a fleet of armored cars that make scheduled pickups and deliveries for its customers in the Muscat 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 deliveries for the Pickup and Delivery cost pool, and number of customers for the Customer Service cost pool. The following costs will be assigned using the activity-based osting system:
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.
![Walid Corporation operates a fleet of armored cars that make
scheduled pickups and deliveries for its customers in the Muscat
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 deliveries
for the Pickup and Delivery cost pool, and number of customers
for the Customer Service cost pool.
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
10.
$420,000
300,000
.200,000
180,000
. 50,000
. 350,000
Total cost
$1,500,000
The distribution of resource consumption across the activity cost
pools is as follows:
Travel Pickup and
delivery
Customer
other Total
service
Driver and guard wages
Vehicle operating expense
Vehicle depreciation
45% 35%
15%
5% 100%
70% 10%
0%
20% 100%
65% 15%
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%
Instructions
Compute the stage allocation of costs of activity cost pools.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F99a1cb61-d8bf-45d0-97b3-f2506041b35f%2F39af9100-354f-4689-b4ee-39e0b3e20b25%2F0jxf74_processed.jpeg&w=3840&q=75)
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