Activity$-$Based Costing for a Service Company

Five$-$Stars Insurance Company carries three major lines of insurance: auto, workers' compensation, and homeowners. The company has prepared the following report:

Five$-$Stars Insurance Company

Product Profitability Report

For the Year Ended December $31$

Management is concerned that the administrative expenses may make some of the insurance lines unprofitable. However, the administrative expenses have not been

allocated to the insurance lines. The controller has suggested that the administrative expenses could be assigned to the insurance lines using activity$-$based costing. The

administrative expenses are comprised of five activities. The activities and their rates are as follows: