1. Navpreet Kaur has recently opened a whole sale food distribution business in Brampton, Ontario. She wants to use activity - based costing for all of its over head costs. Navpreet has provided the following data concerning its annual overhead costs and its activity - based costing system.

Details provided by Navpreet regarding overhead costs:

Delivery + Chief: Wages and Salaries $ 480,000

Other Expenses $ 200,000

TOTAL $680,000

The resource consumption of has the distribution table attached below:

The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. The activity measures for the activity cost pools for the year are as follows:

Activity Cost Pool Activities

Filling Orders 4,000 orders

Customer Support 25 customers

a) Calculate the overall activity rate for Filling Orders activity cost pool.

b) Calculate the overall activity rate for Customer Support activity cost pool.

c) Calculate wages and salaries cost of the delivery personnel's & chiefs if a customer place seven orders in a year.

2. a) List the features of organizations that would find ABC particularly useful for product costing.

(b) Briefly explain the reasons why ABC is particularly suitable in a modern business

environment and describe any situations where it is not appropriate.

Distribution of Resource Consumption: Activity Cost Pools Filling Customer Orders Support 30% 60% 35% 45% Wages and Salaries Other Expenses Other 10% 20% Total 100% 100%