Required information [The following information applies to thequestions displayed below.] OFC Company of Kansas City printsbusiness forms and other specialty paper products, such as writingpaper, envelopes, note cards, and greeting cards. Its BusinessServices division offers inventory management services and desktopdelivery on request. The division uses an activity-based costing(ABC) system. The budgeted usage of each activity cost driver andcost-driver rates for January 2019 for the Business Servicesdivision are:

Activity	Cost Driver	Budgeted Activity			Cost-Driver Rate
Storage	Cartons in inventory		550,000		$	0.5120	/carton/month
Requisition handling	Requisitions		60,000			12.50
Pick packing	Lines		875,000			1.70
Data entry	Lines		875,000			0.80
	Requisitions		45,000			1.26
Desktop delivery	Per delivery		19,500			44.00

For the month, the division expects to make 11,400 deliveries todeliver 1,140,000 cartons to customers.

OFC Company has decided to implement a kaizen(continuous-improvement) program to enhance operational efficiency.After a careful study, management and employees agree that the firmwill be able to reduce cost rates for batch-level activities by 2%and unit-level activities (other than Storage) by 1% per monthduring the first year of the program starting February 2019. Thefirm has decided to delay the implementation of the program forcustomer-sustaining and facility-level activities until 2020. Thefirm expects the amount of cost-driver usage in each of the nexttwo months to be the same as those in January.

Required:

1. Identify unit-level and batch-level activities.

2. What are the total budgeted costs for each activity and forthe division as a whole in February and March?

1

	Storage Pick packing Data entry—Lines Requisition handling Data entry—Requisitions Desktop delivery

2

Budgeted Costs Activity February March Storage Requisition handling Pick packing Data entry—Lines Data entry—Requisitions Desktop delivery Divisional totals