Stevens Services is a call center that specializes in several customer- and order-related activities. They are in the process of implementing Time-Driven Activity-Based Costing (TDABC) and have identified the following pertinent information:
They incurred $155,000 last year to operate the aforementioned activities. Assume that employees handled the following number of calls during the year: Initial Orders, 23,400 calls; Service Requests, 11,480 calls; and Customer Complaints, 9,872 calls. How much total cost would be allocated to the key activities?
A) $48,310.08
B) $117,566.40
C) $146,590.08
D) $155,000.00

Question

Stevens Services is a call center that specializes in several customer- and order-related activities. They are in the process of implementing Time-Driven Activity-Based Costing (TDABC) and have identified the following pertinent information:
 They incurred $155,000 last year to operate the aforementioned activities. Assume that employees handled the following number of calls during the year: Initial Orders, 23,400 calls; Service Requests, 11,480 calls; and Customer Complaints, 9,872 calls. How much total cost would be allocated to the key activities?
A) $48,310.08 
B) $117,566.40 
C) $146,590.08 
D) $155,000.00

Quizplus · Accepted Answer

This question provided the rate for supplying an activity, so the first step needed would be to calculate the cost per transaction. The initial order call costs would equal $0.42 times 10 minutes or $4.20 per call. Service request calls would be $0.42 times 4 minutes or $1.68 per call. Customer complaint calls would be $0.42 times 7 minutes or $2.94 per call. Next, multiply each per-call cost by the number of calls of that type completed for the year: $4.20 × 23,400 = $98,280; $1.68 × 11,480 = $19,286.40; and $2.94 × 9,872 = $29,023.68. The total cost allocated will be the sum of the previously calculated values = $98,280.00 + $19,286.40 + $29,023.68 = $146,590.08 (Choice C).

Stevens Services Is a Call Center That Specializes in Several