The management of Reliance Telecom Gurgaon area customer care centre is contemplating the implementation of the ABC system. The centre has 1,96,000 residential customers and 50,000 commercial customers. The relevant data are summarised below:
The management of Reliance Telecom has decided not to allocate the other resource costs.
REQUIRED:
(a) Prepare schedules to determine the cost per driver unit for each activity and the activity-based cost per account for each customer type.
(b) Consider the verification activity. Suppose the cost per account verified is `0.90. The centre verifies 50 per cent of residential and accommodation bills. Given that there are, on an average, 50 lines on each commercial bill and only 12 lines on each residential bill, comment on the use of accounts verified as a cost driver. What could be a more plausible and reliable cost driver?
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