A service company uses ABC for cost allocation: Customer service activities $80,000 (800 activities), Technical support $120,000 (1,200 hours), Administration $50,000 (5,000 transactions).

• Requirements:
  • Calculate the activity rate for each cost pool using ABC.
  • Allocate costs to different service departments based on activity usage.
  • Prepare a cost allocation report using ABC principles.
  • Recommend cost management strategies based on ABC insights.