EXERCISE 7-2 First Stage AllocationLO7-2 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 Travel Driver and guard wages 50% Vehicle operating expense 70% Vehicle depreciation 60% Customer representative salaries 0% and expenses Office expenses Administrative expenses $ The distribution of resource consumption across the activity cost pools is as follows: 0% 0% $ 720,000 280,000 120,000 160,000 30,000 320,000 1,630,000 Pickup and Customer Delivery Service Other Totals 35% 5% 15% 0% 20% 5% Page 332 10% 5% 100% 0% 25% 100% 0% 90% 25% 100% 10% 100% 30% 50% 60% 35% 100% 100% Required: Complete the first stage allocations of costs to activity cost pools as illustrated in Exhibit 7-5. L
EXERCISE 7-2 First Stage AllocationLO7-2 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 Travel Driver and guard wages 50% Vehicle operating expense 70% Vehicle depreciation 60% Customer representative salaries 0% and expenses Office expenses Administrative expenses $ The distribution of resource consumption across the activity cost pools is as follows: 0% 0% $ 720,000 280,000 120,000 160,000 30,000 320,000 1,630,000 Pickup and Customer Delivery Service Other Totals 35% 5% 15% 0% 20% 5% Page 332 10% 5% 100% 0% 25% 100% 0% 90% 25% 100% 10% 100% 30% 50% 60% 35% 100% 100% Required: Complete the first stage allocations of costs to activity cost pools as illustrated in Exhibit 7-5. L
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:EXERCISE 7-2 First Stage AllocationLO7-2
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
Travel
Driver and guard wages
50%
Vehicle operating expense
70%
Vehicle depreciation
60%
Customer representative salaries 0%
and expenses
Office expenses
Administrative expenses
$
The distribution of resource consumption across the activity cost pools is as follows:
0%
0%
$ 720,000
280,000
120,000
160,000
30,000
320,000
1,630,000
Pickup and Customer
Delivery Service Other Totals
35%
5%
15%
0%
20%
5%
Page 332
10% 5% 100%
0% 25%
100%
0%
90%
25% 100%
10% 100%
30% 50%
60%
35%
100%
100%
Required:
Complete the first stage allocations of costs to activity cost pools as illustrated in Exhibit 7-5.
L
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