Quality Insurance Company carries three major lines of insurance: auto, workers' compensation, and homeowners. The company has prepared the following report for $20$Y$2$:

Quality Insurance Company

Product Profitability Report

For the Year Ended December $31,20$Y$2$

Line Item Description

Auto Workers'

Compensation

Homeowners

Premium revenue $$10,080,000$ $$9,100,000$ $$12,880,000$

Less estimated claims $(7,056,000)(6,370,000)(9,016,000)$

Underwriting income $$3,024,000$ $$2,730,000$ $$3,864,000$

Management is concerned that the administrative expenses may make some of the insurance lines unprofitable. However, the administrative expenses have not been allocated to the insurance lines. The controller has suggested that the administrative expenses could be assigned to the insurance lines using activity$-$based costing. The administrative expenses are comprised of five activities. The activities and their rates are as follows:

Line Item Description Activity Rates

New policy processing $$200$ per new policy

Cancellation processing $$290$ per cancellation

Claim audits $$500$ per claim audit

Claim disbursements processing $$125$ per disbursement

Premium collection processing $$25$ per premium collected

Activity$-$base usage data for each line of insurance were retrieved from the corporate records and are shown below.