Use the Information Below to Answer the Following Question(s)

question 6

Multiple Choice

Use the information below to answer the following question(s) .A transportation company provides bussing, limo and taxi service.The company charges: $350 per day for bussing service; $2.00 per kilometre for taxi service; and, $3.50 per kilometre for limo service.Two individual clients, the school board and the city government offices use the majority of the limo service on a contract agreement.Bussing services are used exclusively by the school board, and the taxi service is used almost exclusively by the general public, although the school board uses the taxi services when individual students have to be transported on occasion.Indirect costs are accumulated on internal records at $1.50 per kilometre for limo use and $1.00 per kilometre for taxi use, and $195 per day for each of the twenty buses.The company's costing system has tracked the following activities for the month:

-The previous controller at the transportation company had always estimated the indirect costs at 25% of billings.What indirect costs were accumulated for each major client for the month under this assumption?

• A)School Board, $33,610.00; City Gov't, $1,080.88
• B)School Board, $2,022.50; City Gov't, $33,610.00
• C)School Board, $33,610.00; City Gov't, $1,762.63
• D)School Board, $1,762.63; City Gov't, $1,921.25
• E)School Board, $2,022.50; City Gov't, $1,762.63

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Definitions:

Marginal Benefit

The boost in enjoyment or value obtained when one more unit of a product or service is consumed or produced.

Economic Theory

A conceptual framework that explains economic processes, behaviors, and the interaction of economic agents, based on assumptions and predictions.

Illegal Immigrants

Individuals who enter or reside in a country without the proper authorization or documentation from the government.

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Individuals who have been granted the right to live permanently in a country other than their own, through a legal process.