1. Greg charges the project team to begin work on the second phase of the project, which...
Question:
1. Greg charges the project team to begin work on the second phase of the project, which is to use the expense allocation process to begin to develop activity-based costs.
2. As its next step, the team gathers information in Table 5 and calculates a rate for each of the functions based on the associated volumes. Use the information in Table 5 to calculate cost rates for the functions identified.
As its first step, the team is going to focus on developing the costs to receive life insurance applications manually and issue a life insurance policy. During July 2012, the company received 11,489 applications and issued 9,385 life insurance policies. Not all applications are issued policies, thus the team must calculate the cost to receive and process the applications and adjust those costs to reflect that approximately one out of five applications does not result in a policy being issued.