Alca Vancouver is a property management service company for small shopping malls that uses ABC to estimate costs for pricing and other purposes. The owner of the company believes that costs are driven primarily by the area of outdoor maintenance (parking lots, sidewalks, and gardens), the area of indoor tenant space in the shopping mall, the distance to travel to the shopping mall, and the number of shopping malls managed. In addition, the costs of managing the indoor tenant space depend on whether the tenants are located on the main level or other levels of the mall. Accordingly, the company uses the five activity cost pools listed below:

Activity Cost Pool	Activity Measure
Management of outdoor areas	Square metres of outdoor areas
Management of indoor mall spacemain level	Square metres of main level mall space
Management of indoor mall spaceother levels	Square metres of nonmain level mall space
Travel to jobs	Kilometres
Customer billing and service	Number of shopping malls

The company has already carried out its first-stage allocations of costs. The companys annual costs and activities are summarized as follows:

Activity Cost Pool	Estimated Overhead Cost	Expected Activity
Management of outdoor areas	$78,850	120,000	square metres of outdoor areas
Management of indoor mall spacemain level	$124,400	100,000	square metres of main level mall space
Management of indoor mall spaceother levels	$317,500	255,000	square metres of nonmain level mall space
Travel to jobs	$7,600	26,000	kilometres
Customer billing and service	$14,800	7	shopping malls

Cherry Shopping Mall is one of Alca Vancouvers oldest clients. Details concerning the malls layout, outdoor space, and distance from Alca Vancouvers head office are as follows:

Activity Cost Pool	Total Activity for Cherry Mall
Management of outdoor areas	14,000	square metres of outdoor areas
Management of indoor mall spacemain level	27,000	square metres of main level mall space
Management of indoor mall spaceother levels	0	as mall only has one level
Travel to jobs	2,300	kilometres travelled
Customer billing and service	1	shopping malls

Required:

1. Compute the activity rate for each of the activity cost pools.(10 marks)

Activity Cost Pool	Activity Rate

2. Determine the total overhead cost that would be assigned to the Cherry Shopping Mall using the ABC system.(10 marks)

Activity Cost Pool	Activity Rate	Activity	ABC Cost
Total cost assigned

3. What are advantages of using Activity-Based-Costing? (5 marks)