1. Fairfield Mortgage Company is a full-service residential mortgage company in the Atlanta area that operates in a very competitive market. The CEO, Mark Williams, is concerned about operating costs associated with processing mortgage applications and has decided to install an ABC costing system to help him get a handle on costs. Although labor hours seem to be the primary driver of the cost of processing a new mortgage, the labor cost for the different activities involved in processing new loans varies widely. The Accounting Department has provided the following data for the company's five major cost pools for 20x9: Activity Cost Pools Taking customer applications 299,000 Conducting credit investigations 195,000 Underwriting 522.000 Preparing loan packages 248,000 Closing loans 600,000 Total 12.164.000 Activity Drivers Time-assistant managers 13,000 hours Time-credit managers 16,500 hours Time-Underwriting Department 9,000 hours Time--Processing Department 8,000 hours Time-Legal Department hours Closing loans 6,000 hours Total 52,500 hours During 20x9, the company processed and issued 5,000 new mortgages, two of which are summarized here with regard to activities used to process the mortgages: Loan 5066 Loan 5429 Application processing hour 1.50 2.75 Credit investigating hours 4.00 3.00 Underwriting hours 12.50 14.75 Processing hours 3.50 3.00 Legal processing hours 1.50 1.50 Total hours 13.00 15.00 Required: Provide all answers in whole numbers with no decimal places. Determine the cost per unit of activity for each activity cost pool. 1 Taking applications! 2. Conducting credit investigations 3. Underwriting! 4. Preparing loan packages 5. Closing loans 10 points QUESTION 2 1 Determine the cost of processing loans 5066 and 5429. Loan 5066 Loan 5429 2 points QUESTION 3 Determine the cost of preparing loans 5066 and 5429 assuming that an average cost per hour for all activities is used. 1. Cost of Loan 5066 Cost of Loan 5429 2 points QUESTION 4 1. Which of the following is true when using average cost compared with ABC? Loan 5066 is overcosted and Loan 5429 is undercosted. Loan 5066 is undercosted and Loan 5429 is overcosted. Both loan 5066 and loan 5429 are undercosted. Both loan 5066 and loan 5429 are overcosted