Refer to Exercise El 9-23. The president of Southern 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:

Compute the predetermined overhead allocation rate for each activity. Round to the nearest dollar.€ƒ

Transcribed Image Text:

Estimated Quantity of Allocation Base Activity Estimated Cost Allocation Base 48,000 Pages 128,000 Applications used 349,000 Direct labor hours 3,200 hours 1,500 pages Documentation preparation Information technology support Training Total indirect costs 640 applications $ 525,000