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Allocate overhead costs using activity rates for different cost pools. Activity Cost ($) Activity Driver Driver Quantity Order processing $60,000 Number of orders 1,200 orders

Allocate overhead costs using activity rates for different cost pools.

Activity

Cost ($)

Activity Driver

Driver Quantity

Order processing

$60,000

Number of orders

1,200 orders

Customer support

$80,000

Hours of support

8,000 hours

Inventory management

$100,000

Number of SKUs

500 SKUs

Requirements:

Calculate the activity rate for each cost pool using ABC.

Allocate overhead costs to products A, B, and C based on activity usage.

Discuss the benefits of using ABC compared to traditional costing methods in the retail industry.

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