1 answer

Extreme Manufacturing Company provides the following ABC costing​ information: Activities Total Costs Activity dash– cost drivers...

Question:

Extreme Manufacturing Company provides the following ABC costing​ information:

Activities

Total Costs

Activity

dash–

cost drivers

Account inquiry

$420,000

14,000 hours

Account billing

$140,000

7,000,000 lines

Account verification accounts

$148,500

60,000 accounts

Correspondence letters

$32,500

5,000 letters

 Total costs

$741,000

The above activities are used by Departments A and B as​ follows:
A B

Account inquiry hours

2,200 hours

3,700 hours

Account billing lines

800,000 lines

650,000 lines

Account verification accounts

7,000 accounts

5,000 accounts

Correspondence letters

1,000 letters

1,400 letters

How much of correspondence costs will be assigned to Department​ A?


Answers

Correspondence costs assigned to department A

= (32,500/5,000)*1,000

= 6.50 * 1,000

= $6500

Comment if you face any issues
.

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