1.Identify the broad activity categories and create cost pools by assigning the costs from Table 2 to the pools.

2.Identify the cost drivers that have a causal relationship to the activity cost pools created in Question 3.

Tables 1-3 provide revenue and expense information

for the first year of operations at the new facility. Tables 4-6

provide additional information useful for the cost analysis

and decision making.

Table 2

Operating Expenses

Accounting & legal $ 900

Advertising 150

Bank charges 35

Continuing education 450

Depreciation 11,800

Food expense 5,500

Ins. - Bldg/property 860

Ins. - Officer bond 120

Ins. - Gen. liability 2,190

Ins. - Workers comp 400

Interest expense 13,085

Payroll - wages* 109,500

Payroll - taxes* 9,475

Repairs & maintenance 5,950

Sanitation Service 2,435

Supplies - Cleaning 365

Supplies - Program/art 3,675

Supplies - Office 2,900

Telephone 1,060

Utilities 4,000

Water/sewer 1,100

TOTAL EXPENSES $ 175,950