Question

The Rockmart Construction Company delivers dirt and stone from local quarries to its construction sites. A new truck that was purchased for a cost of $117,000 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:

Construction sites A B C D
Tons delivered 2,000 3,500 4,000 1,500

How much truck cost should be allocated to Site D? (round to the nearest dollar)

A) $15,955

B) $878

C) $1,170

D) $2,048

E) None of the above

Answer 1

Answer:

B-$878

Explanation:

The total cost of the truck $ 117,000 is allocated to Construction Site D on the basis of number of tons delivered to that Site.

The truck can deliver 200,000 tons over his expected useful life.

so the cost per ton is $117,000/200,000 = $0.585 per ton.

Number of tons delivered to Site D is 1,500 tons.

so the cost allocated to Site D is 1,500 tons × $0.585 = $878