Solution-How much would have been allocated to CD

How much would have been allocated to CD

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Reference no: EM132120958

Question - Books and Brew (BB) is a large city bookstore that sells books and music CD's, and also has a cafe. Currently, BB uses a single-driver system to allocate its operating costs to each of its three product lines, using the number of items sold as the single cost driver. But BB's management is concerned that this allocation system may not be providing the best information for making a variety of pricing decisions. BB's operating costs for 2017 were as follows:

Purchasing department - $453,000

Receiving department - $445,000

Shelf-stocking employee salaries - $465,000

Cashiers and floor employee salaries - $109,000

2017 information about BB's product lines is also available:

	Books	CD's	Cafe
Revenue	$3,646,000	$2,620,000	$800,000
Cost of merchandise	$2,575,000	$1,893,000	$575,000
Number of purchase orders placed	2,660	2,420	1,940
Number of deliveries received	1,280	1,790	1,660
Hours of shelf stocking time	14,100	13,100	12,000
Number of items sold	125,000	111,000	250,000

If BB had used an activity-based costing system to allocate its operating costs in 2017, how much would have been allocated to CD's?

Reference no: EM132120958

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How much would have been allocated to CD

Reference no: EM132120958

Reference no: EM132120958

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