d) After evaluating the information calculated for c) above, what actions might

managers take? (5 marks)

e) Explain why the activity cost driver rates computed in (a) are different from the rates computed in (b). (5 marks)

Active Customer Services Ltd uses a traditional activity-based costing system to assign 900,000 of committed resource costs for customer service on the basis of the following information gathered from interviews with customer service personnel: ACTIVITY Process sales order Process customer complaints Perform customer credit checks TIME PERCENTAGE 55% 15% 30% 100% ESTIMATED COST DRIVER QUANTITY 15,500 customer orders 300 customer complaints 2,000 credit checks Required: a) Compute the activity cost driver rates using this system. (5 Marks) AND b) Suppose instead that Active Customer Services Ltd uses time-driven activity based costing to assign the 900,000 of committed resource costs to the three activities. Compute the time-driven activity cost-driver rates assuming 17,000 hours of useful work and the unit time estimates that follow: ACTIVITY Process sales order Process customer complaints Perform customer credit checks UNIT TIME (HOURS) 0.60 2.0 1.5 (5 Marks) AND c) Suppose that the actual quantities of activities this period are 12,500 customer orders, 250 customer complaints, and 1,500 credit checks. Using the information and activity cost driver rates developed in b), determine the cost assigned to each of the activities and estimated hours of unused capacity as well as the associated cost of unused capacity. (10 Marks) Active Customer Services Ltd uses a traditional activity-based costing system to assign 900,000 of committed resource costs for customer service on the basis of the following information gathered from interviews with customer service personnel: ACTIVITY Process sales order Process customer complaints Perform customer credit checks TIME PERCENTAGE 55% 15% 30% 100% ESTIMATED COST DRIVER QUANTITY 15,500 customer orders 300 customer complaints 2,000 credit checks Required: a) Compute the activity cost driver rates using this system. (5 Marks) AND b) Suppose instead that Active Customer Services Ltd uses time-driven activity based costing to assign the 900,000 of committed resource costs to the three activities. Compute the time-driven activity cost-driver rates assuming 17,000 hours of useful work and the unit time estimates that follow: ACTIVITY Process sales order Process customer complaints Perform customer credit checks UNIT TIME (HOURS) 0.60 2.0 1.5 (5 Marks) AND c) Suppose that the actual quantities of activities this period are 12,500 customer orders, 250 customer complaints, and 1,500 credit checks. Using the information and activity cost driver rates developed in b), determine the cost assigned to each of the activities and estimated hours of unused capacity as well as the associated cost of unused capacity. (10 Marks)