Accounting Question

2. Suppose that you are working as an intern for ABC City and have been asked by the city administration to estimate the cost of street cleaning for the year. You have the following information for the service: 1. Activities: vehicle maintenance, vehicle insurance, utility usage, facility maintenance, and payroll processing 2. Total cost for the year for the city (by activity): Vehicle maintenance – $375,000; Vehicle insurance - $225,000; Utility usage - $8,500; Facility maintenance - $25,600; Payroll processing – $83,500 3. Cost driver for the city (by activity): Vehicle maintenance - Garage labor hours; Vehicle insurance - Mileage/year; Utility usage - Square feet occupied; Facility maintenance - Square feet occupied; and Payroll processing - Number of employees 4. Cost driver level for the city (by activity): Vehicle maintenance – 1,500 hours; Vehicle insurance - 1,215,000 miles; Utility usage – 4,500 sq. ft.; Facility maintenance – 4,500 sq. ft.; and Payroll processing – 350 employees 5. Cost driver level for street cleaning (by activity): Vehicle maintenance – 25 hours; Vehicle insurance - 121,500 miles; Utility usage – 375 sq. ft.; Facility maintenance – 375 sq. ft.; and Payroll processing – 5 employees; In addition to the above, you also have information on direct labor and material costs for street cleaning, as follows: 1. Labor (Driver) – 1,750 hours @ $10.50 an hour 2. Material (Fuel) – 3,000 gallons @ $3.50 a gallon Now, using the information above, do the following: [a] calculate the cost of direct labor [b] calculate the cost of direct material [c] calculate the cost driver rate [d] calculate the indirect (support) cost for each activity [e] calculate the total cost of street cleaning [Hint: Use Activity-Based Costing]