ProDriver Inc. (PDI) recently started operations to obtain a share of the growing market for golf equipment. PDI manufactures two models of specialty drivers: the Thunderbolt model and the Earthquake model. Two professional engineers and a professional golfer, none of whom had any accounting background, formed the company as a partnership. The business has been very successful, and to cope with the increased level of activity, the partners have hired a CPA as their controller. One of the first improvements that the controller wants to make is to update the costing system by changing from a single overhead application rate using direct labour hours to activity-based costing. The controller has identified the following three activities as cost drivers, along with the related cost pools:

Instructions
(a) Using activity-based costing, prepare a schedule that shows the allocation of the costs of each cost pool to each model. Show your calculations.
(b) Identify three conditions that should be present in PDI in order for the implementation of activity-based costing to be successful.

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Model Thunderbolt Earthquake Costs per pool Number of Material Requisitions 46 62 $54,000 Number of Product Inspections 23 31 $8,200 Number of Orders Shipped 167 129 $103,000