The Chapeau Company is noted for an exceptionally impressive line of one-size fits-all men's hats. Chapeau has established the following selling and distribution support activity-cost pools and their corresponding activity drivers for the year 2018:

Activity Cost Cost driver

Marketing $160,000 $1,450,000 of sales

Customer service 70,000 10,000 customer

Order execution 5,000 200 orders

Warehousing 15,000 125 product lines

Required:

a. Determine the activity-cost-driver rate for each of the four selling and distribution activities.

b. Under what circumstances is it appropriate to use each of the activity-cost drivers?

c. Describe at least one possible negative behavioral consequence for each of the four activity-cost drivers.