Question

WD Imagine Inc. has three locations in Canada: Vancouver, Toronto and Montreal. The company develops and maintains web-designs for medium size companies. Management of Vancouver office is concerned about the cost of handling web-related matters.

WD Imagine Vancouver Office has provided the following data for the year 2019:

Junior web-designers salaries          $ 280,000

Senior web-designers salaries            $ 320,000

Office manager salary                        $ 120,000

WD accountant believes that apart from salaries all other expenses are fixed costs and cannot be meaningfully assigned to individual job.

The employees of WD-Vancouver Office have prepared the following table that shows how their time was distributed last year across the two activities

Employee group	Developing complex web-design jobs	Routine web-design maintenance jobs	Other	Total
Junior web-designers Wages	50%	40%	10%	100%
Senior web-designers wages	40%	30%	30%	100%
Office manager salary	5%	20%	75%	100%

Jobs at Vancouver office during 2019 were as follows:

Activity	Total Activity at Burnaby branch
Developing complex web-design	100 Jobs
Routine web-design maintenance	800 jobs

The costs relating to these activities for Toronto office are listed below:

Activity	Cost per Activity for Toronto Bank
Developing complex web-design	$ 3,000 per job
Routine web-design maintenance jobs	$ 200 per job

Required:

a. Compute Vancouver office activity rates for developing complex wed-design AND Routine web-design jobs.

b. Compare the Vancouver results to that of Toronto Office. Suggest two possible reason for the discrepancies noted in each activity rate: complex wed-design AND Routine web-design jobs. (ie 4 in total).

Note that Vancouver is a big city so Burnaby is a small city within Vancouver.

Answer 1