[The following information applies to the questions displayed below.]

OFC Company of Kansas City prints business forms and other specialty paper products, such as writing paper, envelopes, note cards, and greeting cards. Its Business Services division offers inventory-management services and desktop delivery on request. The division uses an activity-based costing (ABC) system. The budgeted usage of each activity cost driver and cost-driver rates for January 2016 for the Business Services division are:

Activity	Cost Driver	Budgeted Activity			Cost-Driver Rate
Storage	Cartons in inventory		430,000		$	0.5120	/carton/month
Requisition handling	Requisitions		36,000			27.50
Pick packing	Lines		815,000			1.52
Data entry	Lines		815,000			0.97
	Requisitions		33,000			1.34
Desktop delivery	Per delivery		13,500			33.00

For the month, the division expects to make 10,200 deliveries to deliver 1,020,000 cartons to customers.

What is the total budgeted cost for each activity and for the Business Services division in January 2016?

Activity	Total Cost
Storage	$220,160
Requisition handling	$990,000
Pick packing	$1,238,800
Data entry - Lines	$790,550
Data entry - Requisitions	$44,220
Desktop delivery	$445,500
Total budgeted cost for the division	$3,729,230

2.

Assume, in contrast to requirement 1, that activity-related information was not available. Rather, the only information available is the budgeted fixed costs for the month are $1,044,000, and the budgeted variable cost per carton is estimated as $2.25. What is the budgeted total cost for the month using this single volume-based approach?

3.

Dories Supply Chain Management Company offers to install an electronic order-processing system that transmits customer requisitions via the Internet to the Business Services division for immediate pick, packing, and delivery. No requisition handling and data entry will be needed once the system is fully functional.

a.	How much savings can the Business Services division expect from switching to the new system before considering the payment to Dories?