Q4. (25 marks) ABC Costing Alca Vancouver 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, sidewalks, 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 managing the indoor tenant space depend on whether the tenants are located on the main level or other levels of the mall. Accordingly. the company uses the five activity cost pools listed below: Activity Cost Pool Activity Measure Management of outdoor areas Square metres of outdoor areas Management of indoor mall space-main level Square metres of main level mall space Management of indoor mall space-other Square metres of non-main level mall levels space Travel to jobs Kilometres Customer billing and service Number of shopping malls The company has already carried out its first stage allocations of costs. The company's annual costs and activities are summarized as follows: Activity Cost Pool Management of outdoor areas Estimated Overhead Cost $78,850 Expected Activity 120.000 square metres of outdoor 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 Cost $78,850 Activity Cost Pool Management of outdoor areas Management of indoor mall space-main level Management of indoor mall space other levels Travel to jobs Expected Activity 120,000 square metres of outdoor areas 100,000 square metres of main level $124,400 mall space $317.500 255,000 square metres of non-main level mall space 26,000 kilometres $7,600 Customer billing and service $14,800 7 shopping malls Cherry Shopping Mall is one of Alca Vancouver's oldest clients. Details concerning the mall's layout, outdoor space, and distance from Alca Vancouver's head office are as follows: Activity Cost Pool Management of outdoor areas Management of indoor mall space-main level Management of indoor mall spaceother levels Travel to jobs Customer billing and service Total Activity for Cherry Mall 14,000 square metres of outdoor areas 27,000 square metres of main level mall space 0 as mall only has one level 2.300 kilometres travelled 1 shopping malls Required: a) Compute the activity rate for each of the activity cost pools Activity Cost Pool Activity Rate b) Determine the total overhead cost that would be assigned to the Cherry Shopping Mall using the ABC system Activity Cost Pool Activity Rate Activity ABC Cost O b) Determine the total overhead cost that would be assigned to the Cherry Shopping Mall using the ABC system Activity Cost Pool Activity Rate Activity ABC Cost Total cost assigned c) What are advantages of using Activity-Based Costing? o SI $
