Paula's Payroll Services provides weekly payroll processing for a number of small businesses. Paula Peraz, the company's owner, has been using an activity-based costing system for several years. She used the following information in preparing this year's budget.
| Activity Cost Pool | Total Cost | Cost Driver | Driver Volume |
| Setting up new employees | $ 78,000 | | Number of new employees | 600 |
| Processing weekly payroll | 780,000 | | Number of paychecks printed | 2,600,000 |
| Weekly reporting | 350,000 | | Number of clients | 125 |
| Annual tax reporting | 245,000 | | Number of W-2s printed | 70,000 |
Required:
| a. | Calculate the cost rates for each activity cost pool. |
| b. | Paula is preparing a proposal for a prospective client, Barney's Bistro. The client has |
25 employees.
What is the estimated cost of providing weekly payroll services to this client for the first year?
| c. | How can Paula use the estimated cost information you have calculated to price the |
service
it will provide to Barney's Bistro.
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