Southcott co is a firm of financial consultants which offers short revision courses on taxation and auditing for professional examinations. The firm has budgeted annual overheads totaling $152,625. Until recently the firm has applied overheads on a volume basis, based on the number of course days offered. The firm has no variable costs and the only direct costs are the consultants' own time which they divide equally between their two courses. The following information relates to the past year and is expected to remain the same for the coming year. Course No. of courses sold Duration of course No. of enquiries No. of brochures Auditing 50 2 days 175 300 Taxation 30 3 days 70 200 All courses run with a maximum number of students (30), as it is deemed that beyond this number the learning experience is severely diminished, and the same center is hired for all courses at a standard daily rate. The firm has the human resources to run only one course at any one time. Required 1. Calculate the overhead cost per course for auditing using traditional volume based absorption costing to the nearest dollar. 2. The firm is considering the possibility of adopting an activity-based costing (ABC) system and has identified the overhead costs as shown below. Details of overheads $ Center hire 62,500 Enquiries administration 27,125 Brochures 63,000 Total 152,625 Calculate the overhead cost of center hire which would be allocated to an auditing course under activity based costing to the nearest dollar. 3. Calculate the overhead cost of brochure printing which would be allocated to a taxation course under activity based costing to the nearest dollar. 4. Calculate the overhead cost of enquiries administration which would be allocated to a taxation course under activity based costing. 5. A member of Southcott Co.s finance team has said that activity based costing (ABC) provides more accurate product costs than a traditional absorption costing system. He gave a number of statements supporting this claim. Which of the following statements does not support his claim?