50.1K

Verified Solution

Link Copied!

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			Paychecks Processed			Accounting Service Costs
1	2			200			1,130		$	58,700
2	1			210			820			60,600
3	4			240			1,290			60,500
4	0			340			880			58,300
5	3			170			1,170			61,200
6	1			170			1,090			61,200
7	2			290			1,210			61,700
8	1			240			960			58,600
9	2			250			890			59,600
10	0			190			910			59,700
11	1			170			830			61,000
12	2			170			840			59,100
13	4			170			1,050			61,200
14	2			230			1,170			59,800
15	2			220			1,270			60,500
16	0			260			830			59,500
Totals	27			3,520			16,340		$	961,200

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	$	183,008
Total cost of maintaining customer accounts		108,768
Total cost of performing special analyses		109,890
Total fixed costs (total for 16 months)		559,534
Total costs	$	961,200

Required:

a-1. What is the cost per unit for paychecks processed?

a-2. What is the cost per unit for customer accounts maintained?

a-3. What is the cost per unit for special analyses performed?

b. Assuming the following level of cost-driver volumes for a month, what are the accounting department's estimated costs of doing business using the account analysis approach?

1,050 paychecks processed.

230 customer accounts maintained.

2 special analyses.

Answer & Explanation Solved by verified expert

See Answer