Reference no: EM133059475
Question - Canadore College has a transportation business. They recently expanded their business by including the provision of Rapid transit buses in Ontario. Canadore College's Manager and management accountant has provided the following information on monthly revenues and costs in Ontario. The Rapid Transit buses division has monthly revenues of $8,700, while the Taxi division generates revenues of $6980.
Expenses of $6800 were allocated to divisions based on the number of kilometres travelled. Anil, the Manager of Canadore College has heard about Activity Based Costing-ABC and wants to know what benefits it could provide so he has obtained the following monthly information on expenses for Ontario:
Mr Anil, the Canadore College Manager has identified that the main activity cost areas include salaries, vehicle costs and booking fees.
Identify the appropriate cost pools and calculate the appropriate driver rates for the activities listed above.
Using ABC costing, prepare a product line profitability report. Show all workings in your answer and ensure you have reconciled data to ensure accuracy of calculations.
Discuss two (2) key observations identified from your calculations?
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