Question

EXERCISE 7-2 First Stage Allocation [LO7-2] 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 that has four activ- ity 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 .... $ 720,000 280,000 120,000 160,000 30,000 320,000 $1,630,000 The distribution of resource consumption across the activity cost pools is as follows: Pickup and Delivery 35% 5% 15% Travel 50% 70% 60% Driver and guard wages Vehicle operating expense ...... Vehicle depreciation .......... Customer Service 10% 0% 0% Other 5% 25% 25% Totals 100% 100% 100% Customer representative salaries and expenses Office expenses ........ Administrative expenses ....... 3 0% 0% 0% 0% 20% na 90% 30% 60% 10% 50% 35% 100% 100% 100% ..... 5% Required: Complete the first stage allocations of costs to activity cost pools as illustrated in Exhibit 7-6.