Extreme Manufacturing Company provides the following ABC costing information: Activities Total Costs Activity−cost drivers Account inquiry $280,000 14,000 hours Account billing $350,000 7,000,000 lines Account verification accounts $93,750 50,000 accounts Correspondence letters $29,000 4,000 letters Total costs $752,750 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 2,100 hours 3,600 hours Account billing lines 500,000 lines 350,000 lines Account verification accounts 7,000 accounts 5,000 accounts Correspondence letters 1,200 letters 1,600 letters How much of the total costs will be assigned to Department A?
Extreme Manufacturing Company provides the following ABC costing information: Activities Total Costs Activity−cost drivers Account inquiry $280,000 14,000 hours Account billing $350,000 7,000,000 lines Account verification accounts $93,750 50,000 accounts Correspondence letters $29,000 4,000 letters Total costs $752,750 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 2,100 hours 3,600 hours Account billing lines 500,000 lines 350,000 lines Account verification accounts 7,000 accounts 5,000 accounts Correspondence letters 1,200 letters 1,600 letters How much of the total costs will be assigned to Department A?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter7: Allocating Costs Of Support Departments And Joint Products
Section: Chapter Questions
Problem 28E: Minor Co. has a job order cost system and applies overhead based on departmental rates. Service...
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Question
Extreme Manufacturing Company provides the following ABC costing information:
|
Activities
|
Total Costs
|
Activity−cost
drivers |
|
|
Account inquiry
|
$280,000
|
14,000 hours
|
|
|
Account billing
|
$350,000
|
7,000,000 lines
|
|
|
Account verification accounts
|
$93,750
|
50,000 accounts
|
|
|
Correspondence letters
|
$29,000
|
4,000 letters
|
|
|
Total costs
|
$752,750
|
|
|
The above activities are used by Departments A and B as follows:
|
|
Department A
|
Department B
|
|
|
Account inquiry hours
|
2,100 hours
|
3,600 hours
|
|
|
Account billing lines
|
500,000 lines
|
350,000 lines
|
|
|
Account verification accounts
|
7,000 accounts
|
5,000 accounts
|
|
|
Correspondence letters
|
1,200 letters
|
1,600 letters
|
|
How much of the total costs will be assigned to Department A?
$85,075
$120,000
$118,825
$88,825
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