Question

The accounting department of a large limousine company is analyzing the costs of its services. The cost data and level of activity for the past 16 months follow: Month Special Analyses Customer Accounts 350 240 190 Paychecks Processed 1.150 1,220 1,280 1.000 1.110 980 830 340 260 310 250 290 840 Accounting Service Costs S 58.300 61,000 61,000 61,000 60,600 59,700 53,100 58,200 58,900 59,400 59,100 58,100 60,700 61,100 60,100 59,200 S 954,500 320 180 200 320 210 180 200 260 4,100 940 1,190 890 1,210 1,090 1,090 1,190 16,770 Totals3 1 In addition to the above information, you learn that the accounting department had the following total costs for the past 16 months for each of the following: Total cost of paychecks processed Total cost of maintaining customer accounts Total cost of performing special analyses Total fixed costs (total for 16 months) Total costs $ 194,532 123.000 126,790 510.178 $954,500 Required: a-1. What is the cost per unit for paychecks processed? (Round your answer to 2 decimal places.) Cost Cost per unit Activity Process paychecks

Answer 1

What is the cost per unit for paychecks processed Activity Process Payhecks Total Cost (A) 194532 Volume (B) 16770 Unit Cost (A/B) 11.60 34 a-2 What is the cost per unit for customer accounts maintained 35 36 Activity Maintain Customer accounts Total Cost (A) 123000 Volume (B) 4100 Unit Cost (A/B) 30.00 What is the cost per unit for special analyses performed Volume (B) Activity Perform Special analyses Total Cost (A) 126790 Unit Cost (A/B) 4090.00 31

Assuming the following level of cost-driver volumes for a month, what are the accounting department's estimated costs of 920 paychecks processed 170 customer accounts maintained 4 special analyses Average Fixed Cost = 510178 16 31886 Estimated Cost = 31886 +920*11.60+170*30+4*4090 64018