DE25-13 Mary Nelson from Daily Exercise 25-10 suspects that her allocation of indirect costs could be giving misleading results, so she decides to develop an ABC system. She identi- fies three activities: documentation preparation, information technology support, and train- Nelson 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 most closely associated with the number of direct labor hours worked. Estimates of the costs and quantities of the allocation bases follow: Activity Documentation preparation....... Information technology support Training Total indirect costs. Compute the cost allocation rate for each activity. Estimated Cost Allocation Base Applications used. Direct labor hours Estimated Quantity of Cost Driver 3,125 pages 140 applications 3,000 hours $100,000 Pages 56,000 24,000 $180,000