The Flintstone Construction Company delivers dirt and stone from local quarries to its construction sites. A new truck that was purchased for a cost of $120,000 at the beginning of the year was expected to deliver 200,000 tons over its useful life. The following is a breakdown of the tons delivered during the year to each construction site: How much truck depreciation should be allocated to Site A? (Do not round intermediate calculations.)
A) $21,818
B) $30,000
C) $2,000
D) None of the answers are correct.

Question

The Flintstone Construction Company delivers dirt and stone from local quarries to its construction sites. A new truck that was purchased for a cost of $120,000 at the beginning of the year was expected to deliver 200,000 tons over its useful life. The following is a breakdown of the tons delivered during the year to each construction site:  How much truck depreciation should be allocated to Site A? (Do not round intermediate calculations.)
A) $21,818 
B) $30,000 
C) $2,000 
D) None of the answers are correct.

Quizplus · Accepted Answer

Allocation rate = Total cost to be allocated ÷ Cost driver (allocation base)
Allocation rate = $120,000 ÷ 200,000 tons = $0.60 per ton
Allocation per cost object = Allocation rate × Weight of the cost driver for that cost object
Allocated cost to Site A = $0.60 per ton × 2,000 tons = $1,200

The Flintstone Construction Company Delivers Dirt and Stone from Local