Hometown Delivery Co. incurred the following costs related to trucks and vans used in operating...
Question:
Hometown Delivery Co. incurred the following costs related to trucks and vans used in operating its delivery service:
1. Changed the oil and greased the joints of all the trucks and vans.
2. Changed the radiator fluid on a truck that had been in service for the past four years.
3. Installed a hydraulic lift to a van.
4. Installed security systems on four of the newer trucks.
5. Overhauled the engine on one of the trucks purchased three years ago.
6. Rebuilt the transmission on one of the vans that had been driven 40,000 miles. The van was no longer under warranty.
7. Removed a two-way radio from one of the trucks and installed a new radio with a greater range of communication.
8. Repaired a hat tire on one of the vans.
9. Replaced a truck s suspension system with a new suspension system that allows for the delivery of heavier loads.
10. Tinted the back and side windows or one of the vans to discourage theft of contents.
Classify each of the costs as a capital expenditure or a revenue expenditure.
Cost classification
Here we distinguish between an expense and a capital expenditure
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answer1. Changed the oil and greased the joints of all the trucks and vans. Revenue expenditure
2. Changed the radiator fluid on a truck that had been in...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
Comparing Cost Classifications
from
Chapter 2 / Lesson 1
5.3K
Costs are categorized based on their function within a business. Examine in detail the common costs accounted for in business decisions: fixed, variable, mixed, direct, indirect, production, period, opportunity, and sunk costs.
Related to this Question
- The Heartland Delivery Service has the following information about its truck fleet miles and operating costs: Year Miles Operating Costs 2015 125,000 $80,000 2016 150,000 $87,500 2017 175,000 $105,0
- Fred owns a delivery truck. Which of the following costs, associated with the truck, will be treated as a revenue expenditure? a. addition to storage capacity b. major engine overhaul c. oil change and lubrication d. modification for new use
- (1. The cost of renovating a recently purchased ten-year-old office building. (2. The materials and labor costs incurred in testing a new piece of equipment. (3. The costs of tuning, lubricating, and tire rotation on fleet of delivery trucks.
- Connect Lines Co. incurred the following costs related to trucks and vans used in operating its delivery service: 1. Replaced a truck's suspension system with a new suspension system that allows for the delivery of heavier loads. 2. Installed a hydrauli
- Which of the following costs would be expensed? a. Performing a tune-up on a delivery truck. b. Adding a refrigeration unit to a delivery truck. c. Adding a new suspension system to a delivery truck that will allow for heavier loads. d. Adding a new trans
- A delivery company is trying to predict the costs of operating a fleet of trucks. They estimate that fuel at $0.50 per mile and fixed maintenance costs at $9,500 per truck. Prepare a flexible budget for fuel and maintenance costs for each truck at mileage
- Indicate which of the following costs should be expensed when incurred. a) $13,000 paid to rearrange and reinstall machinery. b) $200,000 paid-for addition to building. c) $200 paid for a tune-up and oil change on the delivery truck. d) $7,000 paid to
- Westland inc owns a delivery truck. Which of the following costs, associated with the truck, will be treated as a revenue expenditure? a. oil change and lubrication b. major engine overhaul c. modification for new use d. addition to storage capacity
- Assume the local DHL delivery service hub has the following information available about fleet miles and operating costs: Year Miles Operating Costs 2006 554,000 $177,000 2007 674,000 207,000 Use the
- Really Fast Delivery Services has collected the following information about operating expenditures for its delivery truck fleet for the past five years: Year Miles Operating Costs 2009 110,000 $390,0
- Really Fast Delivery Services has the collected the following information about operating expenditures for its delivery truck fleet for the past five years: |Year |Miles |Operating Costs |2009 |110,000| $390,000 | 2010 |140,000 |$420,000 | 2011 |100,0
- A machine and $22,500 cash were exchanged for a delivery truck. The exchange has commercial substance. How should the cost basis of the delivery truck be measured?
- Fred owns a delivery truck. Which costs, associated with the truck, will be treated as a revenue expenditure?
- Indicate which of the following costs should be expensed when incurred. (a) $13,000 paid to rearrange and reinstall machinery. (b) $200,000 paid for addition to building. (c) $200 paid for tune-up and oil change on delivery truck. (d) $7,000 paid to repla
- Are wages of forklift operators who move finished goods from a central warehouse to the loading dock classified as a variable cost, a fixed cost, or a mixed cost? Explain.
- Estimate the total direct cost and cost per 1,000 board feet of lumber for transporting 70,000 board feet of lumber from the lumberyard to a jobsite, which is 18 miles from the yard. Each truck can ha
- Fixed Cost per Month Cost per Repair-Hour Wages and salaries $21,400 $15.00 Parts and supplies $7.30 Equipment depreciation $2,780 $0.50 Truck operating expenses $5,730 $1.70 Rent $4,690 Administrat
- Which of the following activity bases would be the most appropriate for gasoline costs of a delivery service? a) Number of packages picked up. b) How many trucks are in service. c) Total of miles driven. d) Number of truck drivers.
- Should the replacement of tires on a delivery truck be treated as a repair expense or capitalized and depreciated using MACRS? Explain.
- The Hillman Company sells and services lawn mowers, snow blowers, and other equipment. The service department uses a job order cost system to determine costs of each job, such as oil changes, tuneups, and repairs. The department assigns conversion costs t
- The Apollo Delivery Service has the following information about its truck fleet miles and operating costs: Year Miles Operating Costs 2011 250,000 $160,000 2012 300,000 $175,000 2013 350,000 $210,000 What is the best estimate of fixed costs for fleet oper
- The City of Miami is about to replace an old fire truck with a new vehicle in an effort to save maintenance and other operating costs. Which of the following items, all related to the transaction, would not be considered in the decision? a. Purchase pric
- Are delivery truck costs classified as a product cost or a period cost? Explain.
- If a truck is driven 131,000 miles during a year, the average operating cost is 11.9 cents per mile. If a truck is driven only 84,000 miles during a year, the average operating cost increases to 13.3 cents per mile. Using the high-low method, estimate th
- Is the depreciation of delivery trucks a period cost or is it manufacturing overhead?
- The Apollo Delivery Service has the following information about its truck fleet miles and operating costs: Year Miles Operating Costs 2011 250,000 $160,000 2012 300,000 $175,000 2013 350,000 $210,000
- The following items represent common post acquisition expenditures incurred on machinery: a. Lubrication service b. Painting costs c. Cleaning expenditures d. Rewiring costs to increase operating speed e. Repairs f. Replacement of defective parts g
- The activity measures are miles for the Travel cost pool, number of pickups and deliveries for the Pickup and Delivery cost pool and number of customers for the Customer Service cost pool. The Other c
- Moctezuma Furniture Corporation incurred the following cost: Fuel used in delivery trucks. Identify the cost as variable, fixed or mixed.
- What would be the appropriate basis for distributing the costs of each of the following service departments to the user departments? a. Building maintenance b. Inspection and packing c. Machine repair d. Human resources e. Purchasing f. Shipping g.
- Fast as Lightning is an oil change service drive-through that charges each customer $24.00 for an oil and filter change service. Fast as Lightning has found that it costs the business $16.00 per oil and filter change. Monthly fixed costs are $44,000; curr
- SecuriCorp operates a fleet of armored cars that make scheduled pickups and deliveries in the Los Angeles area. Required: Complete the first stage allocations of costs to activity cost pools.
- Street Runner Engine Shop uses a job order cost system to determine the cost of performing engine repair work. Estimated costs and expenses for the coming period are as follows: Engine parts $740,000 Shop direct labor 500,000 Shop and repair equipment dep
- Ready Ride is a trucking company. It provides local, short-haul, and long-haul services. It has developed the following three cost pools. Activity Cost Pools Cost Drivers Estimated Overhead Expected Use of Cost Driver per Activity Loading and unloading Nu
- Exercise 5A-3 Cost Behavior; High-Low Method [LO5-10] Hoi Chong Transport, Ltd., operates a fleet of delivery trucks in Singapore. The company has determined that if a truck is driven 108,000 kilomet
- Puget currently charges $10/mile to cover the variable costs of delivery and includes the $500,000 annual fixed cost related to delivery in the cost of concrete. Now they are considering using a new cost per mile rate that covers both their fixed and vari
- Kwik Delivery Service reports the following costs and expenses n June 2016 INDIRECT MATERIALS $8,400 Driver's salaries $17,000 Depreciationondelivery Advertising
- Should the replacement of spark plugs in a delivery truck be treated as a repair expense or capitalized and depreciated using MACRS? Explain.
- Which one of the following items is not considered a part of the cost of a truck, purchased for business use? a. Truck license. b. Freight charges. c. Coat of lettering on side of truck. d. Sales tax.
- Monte Services, Inc. is trying to establish the standard labor cost of a typical oil change. The following data have been collected from time and motion studies conducted over the past month. | Actual time spent on the oil change | 1.0 hour | Hourly wa
- Monte Services, Inc. is trying to establish the standard labor cost of a typical oil change. The following data have been collected from time and motion studies conducted over the past month. a. Actual time spent on the oil change 3.00 hour. b. Hourly wag
- Freight costs paid on the purchase of new equipment. Are classified as: A. Buildings B. Machinery and Equipment C. Land D. Land Improvements
- Pierpont Engine Shop uses a job order cost system to determine the cost of performing engine repair work. Estimated costs and expenses for the coming period are as follows: Engine parts $700,000 Shop direct labor 520,000 Shop and repair equipment deprecia
- Which one of the following items is not considered a part of the cost of a truck purchased for business use? a) Sales tax. b) Truck license. c) Freight charges. d) Cost of lettering on side of truck.
- Amount DM DL MOH Period Cost Prime Cost Conversion Cost Rent on factory building 8,000 8,000 8,000 Water bill for factory 1,000 1,000 1,000 Stationary for general office 500 500 Lubricant
- For Big Rig Trucks, a manufacturer of large diesel vehicles, is the factory supervisor's salary classified as a fixed or variable cost? Is it a product or period cost? Explain.
- Which of the following would not be considered part of the cost of machinery and equipment? a. In-transit insurance costs b. Delivery charges c. Installation costs d. Repairs and maintenance after start-up
- For Big Rig Trucks, a manufacturer of large diesel vehicles, are accounting fees classified as a fixed or variable cost? Is it a product or period cost? Explain.
- Costs incurred in operating a bakery: Utilities for the bakery Paper used in packaging product Salaries and wages in the bakery Cookie ingredients Bakery labor fringe benefits Administrative costs Bak
- An auto-repair shop faces the following weekly costs: rent, $600; labor, $500 per worker; parts and supplies, $40 per repair. Each worker can repair 3 cars per week. a. What are the costs you can dete
- Roadrunner Trucking Company is a nationwide truckload carrier. They operate in a highly-competitive market on a very thin margin. Below are the projected figures for 2016: Revenue per mile $5.00 Variable cost per mile $4.50 Projected fixed costs $5,000,00
- What are transferred-in costs, as used in a process cost accounting system? a. Labor that is transferred from another department within the same plant, instead of temporary workers hired from the outside. b. Costs that have been incurred in a prior depart
- For Big Rig Trucks, a manufacturer of large diesel vehicles, is depreciation on a salesperson's car classified as a fixed or variable cost? Is it a product or period cost? Explain.
- Black Brothers Furniture Corporation incurred the following cost" Fuel used in delivery trucks. Identify the cost as variable, fixed or mixed. Explain answer.
- Spring Street Engine shop uses a job order costs system to determine the cost of performing engine repair. Engine parts $875,000 Shop direct labor $660,000 Shop and repair equipment depreciation $44,
- Which of the following costs would be included in merchandise inventory? a. purchase price b. insurance in transit FOB shipping point c. freight for delivery FOB shipping point d. repair due to negligence of receiving clerk e. receiving department employe
- What are transferred-in costs, as used in a process cost accounting system? a. labor that is transferred from another department within the same plant, instead of hiring temporary workers from the outside b. costs that have been incurred in a prior depart
- Mountain Swirl Ice Cream purchased and took delivery of one ice cream machine for $7,500.00. Record the sale and the cost of the sale. Markup is 150% of cost. Transfer cost from Finished Goods to COGS
- Bramble Repairs has 200 auto-maintenance service outlets nationwide. It performs primarily two lines of service: oil changes and brake repair. Oil change-related services represent 60% of its sales and provide a contribution margin ratio of 25%. Brake rep
- If the buyer is to pay the freight costs of delivering merchandise, delivery terms are stated as: a. FOB shipping point b. FOB destination c. FOB n/30 d. FOB buyer
- You are planning to acquire a delivery truck for use in your business for five years. In groups of three or four, explore a local dealer s purchase and leasing options for the truck. Summarize the costs of purchasing versus leasing, and list other factors
- PDQ Repairs has 200 auto-maintenance service outlets nationwide. It performs primarily two lines of service: oil changes and brake repair. Oil change-related services represent 80% of its sales and provide a contribution margin rate of 20%. Brake repair r
- Which of the following would not be considered a part of the cost of machinery and equipment? (a) In-transit insurance costs (b) Delivery charges (c) Installation costs (d) Repairs and maintenance after startup.
- For Big Rig Trucks, a manufacturer of large diesel vehicles, is the company president's salary classified as a fixed or variable cost? Is it a product or period cost? Explain.
- Which of the following is a fixed cost? a. depreciation expense on factory building b. cost of dairy ingredients used to produce ice cream c. fuel used by delivery trucks d. labor wages of workers who mix dairy ingredients to make ice cream
- Jake's Roof Repair has provided the following data concerning its costs: Fixed Cost per Month Cost per Repair-Hour Wages and salaries $23,200 $ 16.30 Parts and supplies $ 8.60 Equipment depreciation $1,600 $ 0.40 Truck operating expenses $6,400 $1.70 Re
- A new engine is installed for $2,750 in a work truck. This expenditure would be an example of a(n) (blank) because it extends the useful life of the truck. (a) extraordinary repair (b) maintenance expense (c) prepaid expense (d) ordinary repair
- Willies Engine Shop uses a Job order cost system to determine the cost of performing engine repair work. Estimated costs and expenses for the coming period are as follows: Engine parts $1,134,400 Shop direct labor 828,000 Shop and repair equipment depreci
- Jamison Trucking charges clients $1.82 per mile to pick up, haul, and deliver cargo loads. Of this cost, 62% goes to pay the driver. In contrast, Holliwell Industries charges customers $83.00 for one
- Delivery expense is a(n): a. administrative expense b. factory expense c. operating expense d. overhead expense
- ChimneySweep provides cleaning services for residential chimneys and fireplaces. The cleaning service requires $15 in variable costs for cleaning materials. The fixed costs of labor, the company's truck, and administrative support are $194,400 per year. C
- Who bears the transportation costs when the terms of sale are? (a) FOB shipping point, (b) FOB destination?
- Jake's Roof Repair has provided the following data concerning its costs Fixed Cost Cost per per Month Repair Hour Wages and salaries Parts and supplies Equipment depreciation Truck operating expenses
- A new machine with a purchase price of $90,000, transportation costs of $8,000, installation costs of $6,000, and special handling fees of $2,000, would have a cost basis of: a. $106,000 b. $110,000 c. $108,000 d. $102,000
- Route 66 Car Repair performs routine maintenance on rental vehicles. Recently the local auto rental had its fleet serviced. The company uses the time and materials pricing system and data from the previous year to compute markup percentages for overhead r
- Which of the following is included in the cost of constructing a building? a. Insurance costs during construction. b. The purchase of the delivery truck used to deliver construction materials. c. Cost of repairing vandalism damage during construction.
- Which of the following are Capital or Revenue Expenditure? \\ A. Replaced a truck's suspension system with a new one that allows for delivery of heavier loads. B. Installed a hydraulic lift to a van. C. Repaired a flat tire on the van.
- Qwik Repairs has over 200 auto-maintenance service outlets nationwide. It provides primarily two lines of service: oil changes and brake repair. Oil change-related services represent 63% of its sales and provide a contribution margin ratio of 19%. Brake r
- Repair bills for large machinery may include a flat fee for the visit to the company's premises plus additional labor charges per hour of repair work and various costs of replacement parts needed. What type of cost is the repair? a. Variable cost b. Sel
- Jake's Roof Repair has provided the following data concerning its costs: Fixed Cost per Month Cost per Repair Hour Wages and salaries $21,000 $15 Parts and supplies $7.60 Equipment depreciation $2,790 $0.40 Truck operating expenses $5,770 $1.80 Rent $4,64
- Speedy Shipping is a trucking company that transports goods nationwide. After an analysis of its costs, Speedy has determined that it incurs a total of $75,000 of costs at the lowest level of service
- Predetermined Factory Overhead Rate Spring Street Engine Shop uses a job order cost system to determine the cost of performing engine repair work. Estimated costs and expenses for the coming period ar
- Electric utilities across the country are trying to change the way they charge customers, shifting more of their fixed costs to monthly fees. Traditionally, charges for generating, transporting and ma
- In each of the following situations, determine whether job costing or process costing would be more appropriate. a. A CPA firm b. An oil refinery c. A custom furniture manufacturer d. A tire manuf
- Kwik Delivery Service reports the following costs and expenses in June 2012. Determine the total amount of (a) delivery service (product) costs and (b) period costs.
- Chudzick Small Engine Repair charges $45 per hour of labor. It has a material loading percentage of 40%. On a recent job replacing the engine of a riding lawnmower, Chudzick worked 10.5 hours and used parts with a cost of $700. Calculate Chudzick's total
- Spring Street Engine Shop uses a job order cost system to determine the cost of performing engine repair work. The estimated costs are as follows: The average shop direct labor rate is $30 per hour.
- Willies Engine Shop uses a job order cost system to determine the cost of performing engine repair work. Estimated costs and expenses for the coming period are as follows: |Engine parts|$582,300 |Sh
- When you purchase a new car, the sticker price includes a destination charge. Are you purchasing the car FOB shipping point or FOB destination? Explain.
- Consider the cost of batteries installed in trucks produced at a GM factory. The measure of activity is the number of trucks produced. Is this cost classified as a fixed or variable cost? Explain.
- A motor in one of Excel's trucks was overhauled at a cost of $4,200. Excel expects this overhaul will make the truck operated on a more efficient basis, i.e., the truck will get better gas mileage. Prepare the appropriate entry.
- Monte Services, Inc, is trying to establish the standard labor cost of a typical oil change. The following data have been collected from time and motion studies conducted over the past month. Determin
- Determine which of the following expenses are considered revenue expenditures related to a company vehicle. a. Engine overhaul b. Installation of special equipment c. Car wash d. Oil change e. Dent repair
Explore our homework questions and answers library
Browse
by subject