Refer to Short Exercise 17-7. The president of Antics suspects that her allocation of indirect costs could be giving misleading results, so she decides to develop an ABC system. She identifies three activities: documentation preparation, information technology support, and training. She figures that documentation costs are driven by the number of pages, information technology support costs are driven by the number of software applications used, and training costs are driven by the number of direct labor hours worked. Estimates of the costs and quantities of the allocation bases follow:

Requirement 

1. Compute the cost allocation rate for each activity.

Data From Short Exercise 17-7:

Antics, Inc., is a technology consulting firm focused on Web site development and integration of Internet business applications. The president of the company expects to incur \($719,600\) of indirect costs this year, and she expects her firm to work 8,000 direct labor hours. Antics’ systems consultants earn \($350\) per hour. Clients are billed at 150% of direct labor cost. Last month Antics’ consultants spent 100 hours on Crickett’s engagement.

Transcribed Image Text:

Activity Documentation preparation Information technology support Training Total indirect costs Allocation Base Estimated Cost $ 100,000 Pages 159,600 Applications used 460,000 Direct labor hours. $ 719,600 Estimated Quantity of Allocation Base 3,125 pages 760 applications 4,600 hours