Premium Company provides the following ABC costinginformation:ActivitiesCostsAccount inquiry$200,000Account billing$140,000Activity-cost drivers25,000Account verification accounts$75,000Total costs4,000,000 linesCorrespondence letters10,000 hours40,000 accountsAccount billing lines250,000 linesDepartment BAccount inquiry hourshoursSelect one:4,000 lettersThe above activities are used by Departments A and Bas follows:4,000 hoursAccount verification accountsaccounts8,000 accountsCorrespondence lettersa. $8,750b. $8,500c. $8,250d. $8,540Total1,600 letters$440,000Department2,50010,000400,000 lineslettersHow much of the account billing cost will be assigned toDepartment B1,200

The activity rate is calculated as the estimated cost of activity divided by activity usage. Under…

information: Activities Costs Activity-cost drivers Account inquiry $200,000 Account billing $140,000 25,000 Account verification accounts $75,000 10,000 hours 4,000,000 lines Total costs Correspondence letters 40,000 accounts 4,000 letters Account billing lines 250,000 lines A Department B Account inquiry hours hours The above activities are used by Departments A and B as follows: 4,000 hours Account verification accounts accounts 8,000 accounts Correspondence letters Total 1,600 letters $440,000 Department 2,500 10,000 400,000 lines 1,200 letters How much of the account billing cost will be assigned to Department B

information: Activities Costs Activity-cost drivers Account inquiry $200,000 Account billing $140,000 25,000 Account verification accounts $75,000 10,000 hours 4,000,000 lines Total costs Correspondence letters 40,000 accounts 4,000 letters Account billing lines 250,000 lines A Department B Account inquiry hours hours The above activities are used by Departments A and B as follows: 4,000 hours Account verification accounts accounts 8,000 accounts Correspondence letters Total 1,600 letters $440,000 Department 2,500 10,000 400,000 lines 1,200 letters How much of the account billing cost will be assigned to Department B

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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