Friday, 26 September 2014

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

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 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 $ 1,060,000  
  Vehicle operating expense   490,000  
  Vehicle depreciation   370,000  
  Customer representative salaries and expenses   400,000  
  Office expenses   260,000  
  Administrative expenses   560,000  
 

  Total cost $ 3,140,000  
 





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. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

      Travel      Pickup and
    Delivery
    Customer
   Service
    Other  Totals
  Driver and guard wages $      $      $      $      $     
  Vehicle operating expense                         
  Vehicle depreciation                         
  Customer representative salaries and expenses
                        
  Office expenses                         
  Administrative expenses                         
 




  Total cost $      $      $      $      $     
 












Explanation:
Driver and guard wages:
Travel = $1,060,000 × 40% = $424,000
Pickup and Delivery = $1,060,000 × 45% = $477,000
Customer Service = $1,060,000 × 10% = $106,000
Others = $1,060,000 × 5% = $53,000
 
Vehicle operating expense:
Travel = $490,000 × 75% = $367,500
Pickup and Delivery = $490,000 × 5% = $24,500
Customer Service = $490,000 × 0% = $0
Others = $490,000 × 20% = $98,000
 
Vehicle depreciation:
Travel = $370,000 × 70% = $259,000
Pickup and Delivery = $370,000 × 10% = $37,000
Customer Service = $370,000 × 0% = $0
Others = $370,000 × 20% = $74,000
 
Customer representative salaries and expenses:
Travel = $400,000 × 0% = $0
Pickup and Delivery = $400,000 × 0% = $0
Customer Service = $400,000 × 85% = $340,000
Others = $400,000 × 15% = $60,000
 
Office expenses:
Travel = $260,000 × 0% = $0
Pickup and Delivery = $260,000 × 25% = $65,000
Customer Service = $260,000 × 35% = $91,000
Others = $260,000 × 40% = $104,000
 
Administrative expenses:
Travel = $560,000 × 0% = $0
Pickup and Delivery = $560,000 × 5% = $28,000
Customer Service = $560,000 × 55% = $308,000
Others = $560,000 × 40% = $224,000