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?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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?
 
A.
​$85,075
 
B.
​$120,000
 
C.
​$118,825
 
D.
​$88,825
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