Lalajee Travels operates a fleet of AC cars that make scheduled pickups and deliveries in the New Delhi area. The comp
Posted: Wed Apr 27, 2022 10:45 am
Lalajee Travels operates a fleet of AC cars that make scheduled pickups and deliveries in the New Delhi 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. The following costs will be assigned using the activity-based costing system:
Driver and guard wages
Vehicle operating expenses
Vehicle depreciation
Customer representative salaries and expenses
Office expenses
Total cost
₹1020,000
480,000
120,000
160,000
620,000
₹24,00,000
The distribution of resource consumption across the activity cost pool is as follows:
Travel
Pickup and Delivery
Cust. Serv.
Other
Totals
1.Driver and guard wages
2.Vehicle operating expenses
3.Vehicle depreciation
4. Customer representa-
tive salaries and exp.
5. Office expenses
60%
70%
50%
0%
0%
20%
5%
25%
0%
20%
15%
0%
0%
90%
30%
5%
25%
25%
10%
50%
100%
100%
100%
100%
100%
During the year each cost pool is having following volumes:
Travel
Pickup and Delivery
Customer Service
70000 kms
1000 Nos.
4000 customers
Required:
1) Carry out the first stage allocations of costs to activity cost pools and find out the Activity measure rates.
2) Find out the cost to be charged to a customer if he travels from Lajpat Nagar to Vasant Kunj, a distance of 17 kms.
Driver and guard wages
Vehicle operating expenses
Vehicle depreciation
Customer representative salaries and expenses
Office expenses
Total cost
₹1020,000
480,000
120,000
160,000
620,000
₹24,00,000
The distribution of resource consumption across the activity cost pool is as follows:
Travel
Pickup and Delivery
Cust. Serv.
Other
Totals
1.Driver and guard wages
2.Vehicle operating expenses
3.Vehicle depreciation
4. Customer representa-
tive salaries and exp.
5. Office expenses
60%
70%
50%
0%
0%
20%
5%
25%
0%
20%
15%
0%
0%
90%
30%
5%
25%
25%
10%
50%
100%
100%
100%
100%
100%
During the year each cost pool is having following volumes:
Travel
Pickup and Delivery
Customer Service
70000 kms
1000 Nos.
4000 customers
Required:
1) Carry out the first stage allocations of costs to activity cost pools and find out the Activity measure rates.
2) Find out the cost to be charged to a customer if he travels from Lajpat Nagar to Vasant Kunj, a distance of 17 kms.