Over the past year it has become apparent that the assumption of allocating overhead based on...

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Over the past year it has become apparent that the assumption of allocating overhead based on direct labour hours might not be appropriate. Serry-Webster Ltd has hired you as a management consultant to look at an activity-based costing approach. It has provided you with the following information: Cost pool ATM services Computer processing Customer inquiries Indirect Costs Cost Driver $620,000 ATM transactions $1,600,000 Computer transactions $980,000 Direct labour hours Over the past year it has become apparent that the assumption of allocating overhead based on direct labour hours might not be appropriate. Serry-Webster Ltd has hired you as a management consultant to look at an activity-based costing approach. It has provided you with the following information: Cost pool ATM services Computer processing Customer inquiries Indirect Costs Cost Driver $620,000 ATM transactions $1,600,000 Computer transactions $980,000 Direct labour hours