Books and Brew (BB) is a large city bookstore that sells books and music CDs, and also has a cafe. Currently, BB uses a single-driver system to allocate its operating costs to each of its three product lines, using the number of items sold as the single cost driver. But BB's management is concerned that this allocation system may not be providing the best information for making a variety of pricing decisions. BB's operating costs for 2014 were as follows:

Purchasing department	$499,000
Receiving department	$403,000
Shelf-stocking employee salaries	$464,000
Cashiers and floor employee salaries	$108,000

Books	CD's	Cafe
Revenue	$4,140,000	$2,427,000	$822,000
Cost of merchandise	$2,900,000	$1,865,000	$535,000
Number of purchase orders placed	2,640	2,560	2,050
Number of deliveries received	1,290	1,520	1,440
Hours of shelf-stocking time	15,300	13,500	10,500
Number of items sold	124,000	104,000	262,000

1. Using BB's single-driver system to allocate its operating costs, how much was allocated to CD's in 2014?

2.If BB had used an activity-based costing system to allocate its operating costs in 2014, how much would have been allocated to the cafe? For cashiers and floor employee salaries, use the number of items sold as the cost driver. For all other costs, the appropriate drivers should be clear.

Answer rating: 100% (QA)

Description Books CDs Cafe Total Allocation Revenue 4140000 2427000 822000 Cost of merchandise 29000... View the full answer