Explain the two methods used to assign costs to activities

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Reference no: EM13949530

Receiving has three activities: unloading, counting goods, and inspecting. Unloading uses a forklift that is leased for $12,000 per year. The forklift is used only for unloading. The fuel for the forklift is $2,400 per year. Other operating costs (mainte- nance) for the forklift total $1,000 per year. Inspection uses some special testing equipment that has a depreciation of $800 per year and an operating cost of $500. Receiving has three employees who have an average salary of $40,000 per year. The work distribution matrix for the receiving personnel is given below:

Activity	Percentage of time on each activity
Unloading	40%
Counting	25%
Inspecting	35%

There are no other resources used for these activities.

Required

1. Calculate the cost of each activity.

2. Explain the two methods used to assign costs to activities.

Reference no: EM13949530

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