ABC Costing for a Service Organization Molitor Financial Group is a full-service residential mortgage company in the Chicago area that operates in a very competitive market. Assume management is concerned about operating costs associated with processing mortgage applications and has decided to install an ABC costing system to help them 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 the current year: Activity Cost Pools Taking customer applications Conducting credit investigations Underwriting Preparing loan packages Closing loans Activity Drivers $275,400 Time-assistant managers 3,600 hours 340,200 Time-credit managers 364,500 Time-Underwriting Department 534,600 Time-Processing Department 356,400 Time-Legal Department $1,871,100 5,400 hours 5,400 hours 10,800 hours 3,600 hours 28,800 hours During the year, the company processed and issued 900 new mortgages, two of which are summarized here with regard to activities used to process the mortgages: Application processing hours Credit investigating hours Underwriting hours Processing hours Legal hours Total hours Required Loan 7023 Loan 8955 2 4 3 5 6 6 9 18 4 6 24 39 a. Determine the cost per unit of activity for each activity cost pool. Cost Per Unit of Activity Taking applications: $ per hour Conducting credit investigations: $ per hour Underwriting: $ per hour Preparing loan packages: Closing loans: $ per hour $ per hour b. Determine the cost of preparing loans 7023 and 8955 using activity-based costing. Loan 7023 $ Loan 8955 $ c. Determine the cost of preparing loans 7023 and 8955 assuming that an average cost per hour for all activities is used. Note: Round your answers to two decimal places.