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Unformatted text preview: 1) A. Indirect Cost Allocation Rate (PDOR): B. Total Indirect Cost Assigned to the Retail Customer Line, and the Business Customer Line: Table C. Proportion of Total Indirect Cost Assigned to the Retail Customer Line, and the Business Customer Line: Table Using the original system, D. 7) Using our original cost system, 10% of the indirect costs were allocated to retail customers and 90% were allocated to business customers because retail customers wrote 10% of the dollar value of checks processed while business customers wrote a corresponding 90%. However, using the activity- based costing system, we can see that retail customers actually use much more than 10% of the following activities: paying checks, teller services, and responding to customer account inquiry calls. In fact, 20% of checks processed, 80% of teller transactions, and an overwhelming 95% of account inquiry calls were made by retail customers. Since our new costing system divides the indirect costs between retail and business customers through individual activities, we can view the amounts of each activity that each line...
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This note was uploaded on 01/19/2011 for the course ACCT 3120 taught by Professor Fesslor during the Spring '10 term at UCM.
- Spring '10
- Cost Accounting