How much of the account billing cost will be assigned to Department A? How much of the account verification accounts cost will be assigned to Department B?
Extreme Manufacturing Company provides the following ABC costing information:
Activities Total Costs Activity-cost drivers
Account inquiry $320,000 16,000 hours
Account billing $200,000 4,000,000 lines
Account verification accounts $173,250 70,000 accounts
Correspondence letters $24,000 4,000 letters
Total costs $717,250
The above activities are used by Departments A and B as follows:
Department A Department B
Account inquiry hours 2,700 hours 4,200 hours
Account billing lines 950,000 lines 750,000 lines
Account verification accounts 8,500 accounts 6,500 accounts
Correspondence letters 1,400 letters 1,800 letters
How much of the account billing cost will be assigned to Department A?
How much of the account verification accounts cost will be assigned to Department B?
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