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Newell Property Management is a property management company that uses an ABC system to estimate costs. Their area of specialty is shopping malls. The Controller
Newell Property Management is a property management company that uses an ABC system to estimate costs. Their area of specialty is shopping malls. The Controller analyzed the costs and decided that the company's activities can be summarized in the following cost pools: Activity Cost Pool Oudoor areas Main level - indoor mall Other levels - indoor mall O Travel 1 Customer billing and service 2 Activity Measure Square metres of outdoor areas Square metres of main level mall space Square metres of other level mall space (all levels except main) Kilometres driven Number of shopping malls 3 The controller prepared first-stage allocation of costs. The total annual costs and activities are summarized as follows: 45 15 Activity Cost Pool 16 Oudoor areas 17 Main level - indoor mall Estimated Overhead Cost Expected Activity $ 104,775 190,500 square metres of outdoor space $ 171,600 18 Other levels - indoor mall 19 Travel SS 461,250 $ 9,900 20 Customer billing and service $ 20,700 21 156,000 square metres of main level mall space 369,000 square metres of non-main level mall space 33,000 kilometres 12 shopping malls 22 Details concerning one of their major clients, Sweet Roses Shopping Mall, is summarized as follows: 23 24 Activity Cost Pool 25 Oudoor areas Total activity for Sweet Roses Shopping Mall 32,000 square metres of outdoor space 2 Details concerning one of their major clients, Sweet Roses Shopping Mall, is summarized as follows: 3 4 Activity Cost Pool 25 Oudoor areas 26 Main level - indoor mall 27 Other levels - indoor mall 28 Travel 29 Customer billing and service 30 31 Required Total activity for Sweet Roses Shopping Mall 32,000 square metres of outdoor space 50,000 square metres of main level mall space (mall has only 1 level) 5,000 kilometres 32 1) Compute the activity rate for each activity cost pool. 2 shopping malls 33 2) Determine the total overhead cost that would be assigned to Sweet Roses Shopping Mall using this ABC system. 24
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