# use the information below to answer the following question s a transportation compan 4302598

Use the information below to answer the following question(s).

A transportation company provides bussing, limo and taxi service. The company charges: \$350 per day for bussing service; \$2.00 per kilometre for taxi service; and, \$3.50 per kilometre for limo service. Two individual clients, the school board and the city government offices use the majority of the limo service on a contract agreement. Bussing services are used exclusively by the school board, and the taxi service is used almost exclusively by the general public, although the school board uses the taxi services when individual students have to be transported on occasion. Indirect costs are accumulated on internal records at \$1.50 per kilometre for limo use and \$1.00 per kilometre for taxi use, and \$195 per day for each of the twenty buses.

The company&#39;s costing system has tracked the following activities for the month:

 Client Limo Km Taxi Km Average Days/Bus School board 360 90 19 City gov't 1,943 125 n/a

6) Compute the billing to each major client for the month.

A) School Board, \$134,440.00; City Gov&#39;t, \$7,050.50

B) School Board, \$8,090.00; City Gov&#39;t, \$134,440.00

C) School Board, \$134,440.00; City Gov&#39;t, \$4,323.50

D) School Board, \$7,050.50; City Gov&#39;t, \$7,685.00

E) School Board, \$8,090.00; City Gov&#39;t, \$7,050.50

7) What indirect costs were accumulated for each major client for the month?

A) School Board, \$74,730.00; City Gov&#39;t, \$3,039.50

B) School Board, \$7,050.50; City Gov&#39;t, \$74,730.00

C) School Board, \$74,730.00; City Gov&#39;t, \$7,050.50

D) School Board, \$7,050,50; City Gov&#39;t, \$7,685.00

E) School Board, \$6,925.50; City Gov&#39;t, \$141,420.00

8) The previous controller at the transportation company had always estimated the indirect costs at 25% of billings. What indirect costs were accumulated for each major client for the month under this assumption?

A) School Board, \$33,610.00; City Gov&#39;t, \$1,080.88

B) School Board, \$2,022.50; City Gov&#39;t, \$33,610.00

C) School Board, \$33,610.00; City Gov&#39;t, \$1,762.63

D) School Board, \$1,762.63; City Gov&#39;t, \$1,921.25

E) School Board, \$2,022.50; City Gov&#39;t, \$1,762.63

Use the information below to answer the following question(s).

Fran Ferry Company had the following activities, pooled costs, and physical flow of driver units. The company uses activity-based costing.

 Activities Pooled Costs Physical Flow of Driver Units Account inquiry (hours) \$200,000 5,000 hours Account billing (lines) \$140,000 2,000,000 lines Account verification (accounts) \$5,000 20,000 accounts Correspondence (letters) \$25,000 2,000 letters

The above activities are used by departments A and B as follows:

 A B Account inquiry (hours) 1,000 2,000 Account billing (lines) 200,000 100,000 Account verification (accounts) 5,000 4,000 Correspondence (letters) 500 800

9) How much of the account inquiry cost will be assigned to Department A?

A) \$200,000

B) \$80,000

C) \$66,667

D) \$133,334

E) \$40,000

10) How much of the account billing cost will be assigned to Department B?

A) \$7,000

B) \$14,000

C) \$46,667

D) \$93,333

E) \$140,000

Use the information below to answer the following question(s).

Bill Cobb Corporation had the following activities, pooled costs, and physical flow of driver units. The company uses activity-based costing.

 Activities Pooled Costs Physical Flow of Driver Units Account inquiry (hours) \$400,000 5,000 Account billing (lines) \$280,000 2,000,000 Account verification (accounts) \$150,000 20,000 Correspondence (letters) \$50,000 2,000

The above activities are used by departments X and Y as follows:

 X Y Account inquiry (hours) 500 hours 800 hours Account billing (lines) 250,000 lines 200,000 lines Account verification (accounts) 2,000 accounts 1,000 accounts Correspondence (letters) 200 letters 1,000 letters

11) How much of the correspondence cost will be assigned to Department X?

A) \$10,000

B) \$8,333

C) \$25,000

D) \$5,000

E) \$50,000

12) How much of the account verification cost will be assigned to Department Y?

A) \$15,000

B) \$7,500

C) \$100,000

D) \$10,000

E) \$50,000

13) Using a department indirect cost rate to allocate costs to products will result in the same product costs as an ABC system if which of the following is true?

A) if each activity within a department has the same cost allocation base, and the different products use resources from different activity areas in the same proportion

B) if significant costs are incurred on different activities with different cost-allocation bases within a department, the different products use resources from different activity areas in different proportions

C) if no single activity accounts for a significant fraction of a department&#39;s costs

D) if information needed for an ABC is too expensive to develop and maintain accurately

E) if each activity in a department has a separate costing system and uses different activity cost drivers

14) When calculating the total amount of manufacturing overhead to allocate to a particular job, the company would multiply each departmental overhead rate by ________ and then ________ together the allocated amounts from each department.

A) the actual amount of the departmental allocation base used by the job; add

B) the actual amount of the plant-wide allocation base used by the job; add

C) the actual amount of the departmental allocation base used by the job; multiply

D) the actual amount of the plant-wide allocation base used by the job; multiply

E) the actual amount of the activity allocation base used by the job; add

15) Babcock Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: Assembly and Sanding. The Assembly Department uses a departmental overhead rate of \$20 per machine hour, while the Sanding Department uses a departmental overhead rate of \$15 per direct labour hour. Job 396 used the following direct labour hours and machine hours in the two departments:

 Actual results Assembly Department Sanding Department Direct labour hours used 4 3 Machine hours used 9 5

The cost for direct labour is \$25 per direct labour hour and the cost of the direct materials used by Job 396 is \$1,200.

What was the total cost of Job 396 if Babcock Industries used the departmental overhead rates to allocate manufacturing overhead?

A) \$1,375

B) \$1,425

C) \$1,500

D) \$1,600

E) \$1,630

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