Exercise $7-41$ Assigning Costs to Activities, Resource Drivers

The Receiving Department has three activities: unloading, counting goods, and inspecting.

Unloading uses a forklift that is leased for $$15,000$ per year. The forklift is used only for unloading.

The fuel for the forklift is $$3,600$ per year. Other operating costs $($maintenance$)$ for the forklift total $$1,500$ per year. Inspection uses some special testing equipment that has a depreciation of $$1200$ per year and an operating cost of $$750.$ Receiving has three employees who have an average salary of $$50,000$ per year. The work distribution matrix for the receiving personnel is as follows:

OBJECTIVE

Percentage of Time on

Activity

Each Activity

Unloading

$40\%$

Counting

$25\%$

Inspecting

$35\%$

No other resources are used for these activities.

Required:

$1.$ Calculate the cost of each activity

$2.$ Conceptual Connection: Explain the two methods used to assign costs to activities