Bruno runs the call center for Dual Star, Inc., a company that specializes in handling customer...

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Bruno runs the call center for Dual Star, Inc., a company that specializes in handling customer calls for other businesses. Dual Star is currently using a traditional costing system, but Bruno feels that management would be better served by implementing Time-Driven Activity-Based Costing (TDABC) and has identified the following pertinent information: Key Transactions Tech Issue Resolution Call Customer Product Return Call Per Minute Rate for Supplying an Activity $0.41 Estimated Time per Transaction 11 minutes $0.41 $0.41 Customer Complaint Call 4.4 minutes 8 minutes They incurred $187,000.00 last year to complete these key activities. Assume that employees handled the following number of calls during the year: Tech Issue Resolution, 18,600 calls; Customer Product Return, 6,540 calls; and Customer Complaints, 10,740 calls. When comparing actual costs incurred to operate the activities to the allocated costs, what is the difference and is it over- or under-allocated? (If required, round calculations to two decimal places.) First step needed would be to calculate the cost per transaction. Multiply activity rate by estimated cost per transaction: A tech issue resolution call would be $0.41 times 11minutes or A customer product return call would be $0.41 times 4.4 minutes or A customer complaint call would be $0.41 times 8 minutes or $ per call. (A $ per call. (B $ per cal. (C Next, multiply each per-call amount by the number of calls of that type completed during the year: (A x 18,600 = $ (a (B x 6,540 = $ (b (C 10,740 = $ (c The total cost allocated will be the sum of the values from the previous step: (a+(b+(c=$ total allocated to key activities. (d Lastly, compare the total cost allocated to the total cost actually incurred: $187,000.00 (d=$ This difference represents the total underapplied or overapplied cost. Bruno runs the call center for Dual Star, Inc., a company that specializes in handling customer calls for other businesses. Dual Star is currently using a traditional costing system, but Bruno feels that management would be better served by implementing Time-Driven Activity-Based Costing (TDABC) and has identified the following pertinent information: Key Transactions Tech Issue Resolution Call Customer Product Return Call Per Minute Rate for Supplying an Activity $0.41 Estimated Time per Transaction 11 minutes $0.41 $0.41 Customer Complaint Call 4.4 minutes 8 minutes They incurred $187,000.00 last year to complete these key activities. Assume that employees handled the following number of calls during the year: Tech Issue Resolution, 18,600 calls; Customer Product Return, 6,540 calls; and Customer Complaints, 10,740 calls. When comparing actual costs incurred to operate the activities to the allocated costs, what is the difference and is it over- or under-allocated? (If required, round calculations to two decimal places.) First step needed would be to calculate the cost per transaction. Multiply activity rate by estimated cost per transaction: A tech issue resolution call would be $0.41 times 11minutes or A customer product return call would be $0.41 times 4.4 minutes or A customer complaint call would be $0.41 times 8 minutes or $ per call. (A $ per call. (B $ per cal. (C Next, multiply each per-call amount by the number of calls of that type completed during the year: (A x 18,600 = $ (a (B x 6,540 = $ (b (C 10,740 = $ (c The total cost allocated will be the sum of the values from the previous step: (a+(b+(c=$ total allocated to key activities. (d Lastly, compare the total cost allocated to the total cost actually incurred: $187,000.00 (d=$ This difference represents the total underapplied or overapplied cost.

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