c) Suppose that the quantities of activities this period are 6,250 customer orders, 250 customer complaints, and 1,500 credit checks. Using the information and activity cost driver rates developed in b), determine the cost assigned to each of the activities and estimated hours of unused capacity as well as the associated cost.

d) After evaluating the information calculated for c) above, what actions might managers take?

[5 MARKS]

AND

e) Explain why the activity cost driver rates computed in (a) are different from the rates computed in (b).

[5 MARKS]

QUESTION 6 Badger Company uses a traditional activity-based costing system to assign 350,000 of committed resource costs for customer service on the basis of the following information gathered from interviews with customer service personnel: ACTIVITY Process sales order Process customer complaints Perform customer credit checks TIME PERCENTAGE 65% 5% 30% 100% ESTIMATED COST DRIVER QUANTITY 6,250 customer orders 250 customer complaints 1,500 credit checks Required: a) Compute the activity cost driver rates using this system. [5 MARKS] AND b) Suppose instead that Badger uses time-driven activity based costing to assign the 350,000 of committed resource costs to the three activities. Compute the time-driven activity cost-driver rates assuming 8,750 hours of useful work and the unit time estimates that follow: ACTIVITY Process sales order Process customer complaints Perform customer credit checks UNIT TIME (HOURS) 0.65 2.5 2.0 [5 MARKS]