Fashion Express, Inc. is a clothing retail vendor that specializes in modern women's clothing. They incurred costs of $146,000 last year to facilitate their staff performing customer service and sales activities. These resources create a capacity of 210,000 minutes for Fashion Express within their customer service and sales activity per year. On average, servicing all customers requires the following transactions throughout the year: processing sales orders, 105,000 minutes; restocking merchandise, 44,500 minutes; cash register, 50,450 minutes; and issuing returns, 10,050 minutes. Using Time-Driven Activity-Based Costing (TDABC), how much cost will be allocated to the cash register transactions? (If required, round calculations to two decimal places.)

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Quizplus · Accepted Answer

This question requires multiple steps in order to be able to calculate the cost that will be allocated under TDABC. First, calculate the rate for supplying an activity by taking the total cost of the activity and dividing it by the practical capacity available expressed in time: $146,000/210,000 = $0.70 per minute. Next, multiply the per-unit rate by the activity: $0.70 × 50,450 minutes = $35,315.00 (Choice B).