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LM Operates a Parcel Delivery Service

question 32

Multiple Choice

LM operates a parcel delivery service. Last year its employees delivered 15,120 parcels and travelled 120,960 kilometers. Total costs were $194,400. LM has estimated that 70% of its total costs are variable with activity and that 60% of these costs vary with the number of parcels and the remainder vary with the distance travelled. LM is preparing its budget for the forthcoming year using an incremental budgeting approach and has produced the following estimates: • All costs will be 3% higher than the previous year due to inflation • Efficiency will remain unchanged • A total of 18,360 parcels will be delivered and 128,800 kilometers will be travelled. Calculate the following costs to be included in the forthcoming year's budget: (i) the total variable costs related to the number of parcels delivered. (ii) the total variable costs related to the distance travelled.

Definitions:

Role Differentiation

The process by which members of a society or group develop specialized functions, responsibilities, or social statuses.

Collective Consciousness

The set of shared beliefs, ideas, and moral attitudes which operate as a unifying force within society.

Social Institutions

Complexes of norms, values, and roles that organize social activities into stable patterns and contribute towards meeting social needs, such as family, education, and government.

Division of Labor

The allocation of different tasks and responsibilities to different individuals or groups in an organization or society.