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:
|
|
|
Customer
|
Paychecks
|
Accounting
|
|
Month
|
Special Analyses
|
Accounts
|
Processed
|
Service Costs
|
|
1
|
2
|
325
|
1,029
|
$ 63,800
|
|
2
|
4
|
310
|
993
|
68,900
|
|
3
|
2
|
302
|
1,268
|
64,000
|
|
4
|
1
|
213
|
1,028
|
61,300
|
|
5
|
2
|
222
|
984
|
61,600
|
|
6
|
0
|
214
|
712
|
50,800
|
|
7
|
1
|
131
|
762
|
51,020
|
|
8
|
1
|
123
|
739
|
54,300
|
|
9
|
0
|
115
|
708
|
50,500
|
|
10
|
2
|
296
|
1,232
|
64,800
|
|
11
|
2
|
213
|
978
|
58,000
|
|
12
|
1
|
222
|
929
|
57,500
|
|
13
|
2
|
217
|
1,059
|
62,200
|
|
14
|
2
|
132
|
942
|
54,900
|
|
15
|
4
|
300
|
1,299
|
71,530
|
|
16
|
4
|
315
|
1,283
|
64,800
|
|
Totals
|
30
|
3,650
|
15,945
|
$959,950
|
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
|
$180,100
|
|
Total cost of maintaining customer accounts
|
109,600
|
|
Total cost of performing special analyses
|
120,000
|
|
Total fixed costs (total for 16 months)
|
550,250
|
|
Total costs
|
$959,950
|
Required
a. What is the cost per unit for (1) paychecks processed, (2) customer accounts maintained, and (3) 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?
- 1,000 paychecks processed
- 200 customer accounts maintained
- 3 special analyses