Paul runs the call center for Igloo Corp., a company that specializes in handling customer calls for other businesses. Igloo is currently using a traditional costing system, but Paul feels that management would be better served by implementing Time-Driven Activity-Based Costing (TDABC) and has identified the following pertinent information:
They incurred $198,000.00 last year to complete these key activities. Assume that employees handled the following number of calls during the year: Tech Issue Resolution, 19,700 calls; Customer Product Return, 7,650 calls; and Customer Complaints, 10,850 calls. When comparing actual costs incurred to operate the activities to the allocated costs, what is the difference and is it over- or underallocated? (If required, round calculations to two decimal places.)

Question

Paul runs the call center for Igloo Corp., a company that specializes in handling customer calls for other businesses. Igloo is currently using a traditional costing system, but Paul feels that management would be better served by implementing Time-Driven Activity-Based Costing (TDABC) and has identified the following pertinent information:
  They incurred $198,000.00 last year to complete these key activities. Assume that employees handled the following number of calls during the year: Tech Issue Resolution, 19,700 calls; Customer Product Return, 7,650 calls; and Customer Complaints, 10,850 calls. When comparing actual costs incurred to operate the activities to the allocated costs, what is the difference and is it over- or underallocated? (If required, round calculations to two decimal places.)

Quizplus · Accepted Answer

The Answer of Paul runs the call center for Igloo Corp., a company that specializes in handling customer calls for other businesses. Igloo is currently using a traditional costing system, but Paul feels that management would be better served by implementing Time-Driven Activity-Based Costing (TDABC) and has identified the following pertinent information:
  They incurred $198,000.00 last year to complete these key activities. Assume that employees handled the following number of calls during the year: Tech Issue Resolution, 19,700 calls; Customer Product Return, 7,650 calls; and Customer Complaints, 10,850 calls. When comparing actual costs incurred to operate the activities to the allocated costs, what is the difference and is it over- or underallocated? (If required, round calculations to two decimal places.)

Paul Runs the Call Center for Igloo Corp