Data Processors perform credit card services for banks. The company uses an ABC system. The following information applies to the past year:

REQUIRED

A. Are the activities listed likely to be the only possible set of activities for the ABC system? Why or why not?

B. Using estimated values for cost and volume, calculate an ABC allocation rate for each activity.

C. Explain why actual costs and volumes are likely to be different from estimated amounts.

D. Is practical capacity likely to be higher or lower than the estimated volume?Explain.

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Actual Cost Estimated Cost $2,000,000 $2,200,000 Number of transaction:s Activity Processing transactions Issuing monthly statements Issuing new credit cards Resolving billing disputes Cost Driver 1,000,000 500,000 90,000 $3,590,000 1,300,000 400,000 100,000 $4,000,000 Number of statements Number of new credit cards Number of disputes Total Estimated Volume 5,000,000 250,000 100,000 Actual Volume 5,800,000 270,000 110,000 Cost Driver Number of transactions Number of statements Number of new credit cards Number of disputes 3,000 3,500