EXERCISE 7-5 Compute Activity Rates and Assign to a Cost Object O2, 1031 Brookside Property Management 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 side- walks 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 man- aging the indoor tenant space depend on whether the tenants are located on the main level or other levels of the mall. Accondingly, the company uses the five activity cost pools listed below Activity Cest Pool Management of outdoor areas Management of indoor mall space-main level Managment of indoor mall space-other levels Travel to jobs Customer billing and service Activity Measure Square metres of outdoor ares Square metres of main level mall space Square metres of non-main level mall space Nometres Number of shopping malls www.tex-cetera.com 282 Chapter 7 Activity-Based Costing: A Tool to Aid Decision Making The company has already carried out its first-stage allocations of costs. The company's annual costs and activities are summarized as follows Estimated Overhead Activity Cost Pool Cost Expected Activity Management of outdoor areas. $66850 127000 square metres of outdoor areas Management of indoor mall space-main level... Management of indoor mall space-other levels.. $400 104000 square metres of main level mall space 130/500 Travel to jobs $6600 346000 square metres of non-main level mall space 22.000 kilometres Customer billing and service.. $ 13800 8 shopping malls Parker Hills Shopping Mall is one of Brookside's oldest clients. Details concerning the mall's layout, outdoor space and distance from Brookside's head office are as follows Activity Management of outdoor areas Management of indoor mall space-main levd. Management of indoor all space-other levels. Travel to jobs Customer billing and service. Required: Total Activity for Parker Hills Mall 16000 square metres of outdoor areas 25.000 square metres of main level mall space Qas mall only has one level 2.500 kilometres travelled 1 shopping mall 1. Compute the activity rate for each of the activity cost pools. 2. Determine the total overhead cost that would be assigned to the Parker Hills Shopping Mall using the ABC system