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2.3 [10 marks) Activity Based Costing - Chapter 7 Easy Credit Financial is a banking services company that offers many different types of cheguing accounts. It has recently adopted an activity-based costing (ABC) system to assign costs to various types of chequing accounts. The following data relate to one type of chequing account, the money market" cheguing account, and the ABC cost pools: Total number of cheguing accounts: Number of money market" cheguing accounts: 221,750 70.000 Chegueing Account Cost Pools Cost Pool Returned cheque costs Cheguing account reconciliation costs New acc int setup Photocopies of cancelled cheques Cost Cost Driver $3,000,000 Number of returned cheques 60,000 Number of account reconciliation requests 780,000 of new punts 300,000 Number of cancelled cheque copy requests 225,000 Per product group (type of cheguing account) $4,365,000 Web site maintenance (online banking) Total Cheguing account costs Annual activity information related to cost drivers Cost Pool All Products Returned cheque costs Cheque reconciliation costs New accounts Cancelled cheque photocopies requests Web site costs 200,000 returned cheques 3,000 cheguing account reconciliations 60,000 new accounts 80,000 cancelled cheque photocopy requests 10 types of cheguing accounts Money Market Cheguing 18,000 420 20,0000 50,000 Required: a) Calculate the cost rate per cost driver activity for each of the five cost pools. Round to the nearest dollar. b) Calculate the total cost assigned to the "Money Market" chequing account. Round to the nearest dollar. 4 c) Suppose that Easy Credit Financial allocates overhead using the number of chequing accounts as the allocation base and one cost pool. Determine the cost rate per cheguing account and the per account cost assigned to the "Money Market" chequing account. Explain in detail the difference in cost allocations between this method and the ABC approach

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