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Aladin's customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department initiated 8,600 calls and incurred costs of $189,200. If 3,460 of these calls were for the company's wholesale operation (the remainder were for the retail division), costs allocated to the wholesale operation under activity‐based costing system should amount to:

Respuesta :

Answer:

$76,120

Explanation:

For computing the allocated cost, first we have to determine the per call cost which is shown below:

Per call cost = Cost incurred ÷ number of calls

                    = $189,200 ÷ 8,600 calls

                    = $22

The calls for wholesale operation = 3,460 calls

The calls for retail division would be

= 8,600 calls - 3,460 calls

= 5,140 calls

Now the allocated cost to the wholesale operation would be

= 3,460 calls × $22

= $76,120

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