1.Identify the broad activity categories and create cost pools by assigning the costs from Table 2 to...
Question:
1.Identify the broad activity categories and create cost pools by assigning the costs from Table 2 to the pools.
2.Identify the cost drivers that have a causal relationship to the activity cost pools created in Question 3.
Tables 1-3 provide revenue and expense information
for the first year of operations at the new facility. Tables 4-6
provide additional information useful for the cost analysis
and decision making.
Table 2
Operating Expenses
Accounting & legal $ 900
Advertising 150
Bank charges 35
Continuing education 450
Depreciation 11,800
Food expense 5,500
Ins. - Bldg/property 860
Ins. - Officer bond 120
Ins. - Gen. liability 2,190
Ins. - Workers comp 400
Interest expense 13,085
Payroll - wages* 109,500
Payroll - taxes* 9,475
Repairs & maintenance 5,950
Sanitation Service 2,435
Supplies - Cleaning 365
Supplies - Program/art 3,675
Supplies - Office 2,900
Telephone 1,060
Utilities 4,000
Water/sewer 1,100
TOTAL EXPENSES $ 175,950
Fundamental Managerial Accounting Concepts
ISBN: 978-1259569197
8th edition
Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Olds