A service company uses ABC for cost allocation: Customer service activities $120,000 (1,000 activities), Technical support $180,000 (1,500 hours), Administration $60,000 (6,000 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.