United Parcel Service, Inc. (UPS) provides package delivery services using operating costing. In January 2033, the company incurs the following operating costs:

• Sorting Facility Rent: $40 million
• Delivery Personnel Costs: $50 million
• Transportation Costs: $35 million
• Customer Service: $15 million
• Selling Expenses: $25 million
• Distribution Expenses: $20 million

Required:

• Allocate operating costs to sorting, delivery, and transportation operations.
• Determine the cost per package delivered assuming 200 million packages processed.
• Analyze the cost structure and profitability of UPS's package delivery operations.
• Discuss the role of cost allocation in managing operating costs.
• Prepare an operating costing statement for UPS.