Problem 6.13 (102) Activity-Based Costing at a Service Company Tannhauser Financial is a banking services company that offers many different types of checking accounts. It has recently adopted an activity-based costing system to assign costs to various types of checking accounts. The following data relate to one type of checking account, the money market checking account, and the ABC cost pools: Total Number of Checking Accounts 221,750 Number of Money Market Checking Accounts 70,000 Checking account cost pools: Cost Pool Returned check costs Checking account reconciliation costs New account setup Copies of cancelled checks Website maintenance (for online banking) Total checking account costs Annual activity information related to cost drivers: Cost Pool Cost Cost Driver $3,000,000 Number of returned checks 60,000 Number of account reconciliation requests 780,000 Number of new accounts. 300,000 Number of cancelled check copy requests 225,000 Per product group (type of checking account) $4,365.000 All Products Money Market Checking Returned checks 200,000 returned checks 18,000 Check reconciliation costs New accounts 3,000 checking account reconciliations 60,000 new accounts 420 Required Cancelled check copy requests 80,000 cancelled check copy requests Website costs 10 types of checking accounts a. Calculate the cost rate per cost driver activity for each of the five cost pools. Round to two decimal places. b. Calculate the total cost assigned to the money market checking account. Round to two decimal places. 20,000 50,000 c. Suppose that Tannhauser Financial allocates overhead using the number of checking accounts as the allocation base and one cost pool. Determine the cost rate per checking account and the per account cost assigned to the money market checking account. Discuss the difference in cost allocations between this method and the activity-based costing approach.