Required: a) Use activity-based costing to estimate the cost


Mel Snow is the superintendent of a solid, Taxation Matters, which specialises in the making-ready of proceedstax receipts. The solid offers two basic products: the making-ready of proceeds tax receipts for wage andhire earners, and the making-ready of proceeds tax receipts for diminutive affaires. Any clients requiringmore complicated services are referred to Snow's match Roger, who is a associate in a wide solid ofchartered accountants.The modeing of wage and hire tax receipts is wholly innocuous, and the solid uses a softwareload to mode facts and stereoform the reappear. A software load is besides used to just receipts fordiminutive affaires, although more notification is required, in-particular encircling affair expenses.Snow has simply recently additional Taxation Matters and he is restless encircling the solid's pricing cunning,which sets mawkish fees of $60 per reappear for wage and hire clients and $300 for diminutive affaires. Hedecides to use air-based costing to deem the costs of providing each of these services.At the end of the year, Snow reviewed the solid's entirety costs and activities, resulting in the followinglist:ActivityActivity costActivity driverQuantity of air driverInterview salaried client$ 60,000No. of salaried clients8,000Interview affair client75,000No. of affair clients2,000Obtain privation facts600,000No. of follow-up calls8,000Input facts120,000No. of facts entries400,000Print reappear90,000No. of receipts10,000Verify reappear after a while client180,000No. of hours6,000Rectify errors90,000No. of errors6,000Submit reappear30,000No. of receipts10,000Total costs$1 245,000In identifying the activities required for each form of reappear, Snow glorious the following:Clients are interviewed simply uniformly per reappear.All follow-up calls to get privation facts narrate to affair receipts; on middle, each affair taxreappear requires impure follow-up calls.Processing a wage and hire tax reappear requires 20 facts entries, seeing a affair reappearrequires 120 facts entries.On middle, it takes 22.5 minutes to authenticate a wage and hire tax reappear, seeing it takes one anda half hours to authenticate a affair reappear.All errors narrate to affair receipts; on middle, there are 3 errors per affair reappear.

Show more

Source connect