Extreme Manufacturing Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry S390,000 13,000 hours Account billing $275,000 5,000,000 lines Account verification acounts $130,500 60,000 accounts Correspondence letters s22,000 4,000 letters Total costs $817,500 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 2,500 hours 4,000 hours Account billing lines 800,000 lines 650,000 lines Account verification acounts 9,000 accounts 7,000 accounts Correspondence letters 2,000 letters 2,400 letters How much of correspondence costs will be assigned to Department A? 1. $22,000 2. $49,500 3. $11,000 11,242 4.

Extreme Manufacturing Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry S390,000 13,000 hours Account billing $275,000 5,000,000 lines Account verification acounts $130,500 60,000 accounts Correspondence letters s22,000 4,000 letters Total costs $817,500 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 2,500 hours 4,000 hours Account billing lines 800,000 lines 650,000 lines Account verification acounts 9,000 accounts 7,000 accounts Correspondence letters 2,000 letters 2,400 letters How much of correspondence costs will be assigned to Department A? 1. $22,000 2. $49,500 3. $11,000 11,242 4.

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter5: Buying The Necessities

Section: Chapter Questions

Problem 20AA

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Eide? Company, a manufacturer of small? appliances, had the following? activities, allocated? costs, and allocation? bases: Activities Allocated Costs Allocation Base 2,700 hours Account inquiry (hours) Account billing (lines) Account verification (accounts) Correspondence (letters) S80,000 $31,000 20,000 lines 23,000 accounts 1,000 letters $13,000 $10,000 The above activities are carried out at two of its regional offices. Activities Northeast Office Midwest Office Account inquiry (hours) Account billing (lines) Account verification (accounts) Correspondence (letters) 140 hours 250 hours 14,000 lines 1,500 accounts 30 letters 8,000 lines 600 accounts 140 letters What is the cost per account for the account verification? activity? (Round your answer to the nearest? cent.)
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\table[[\table[[Output], [per], [Month]], Price, \table[[Total], [Revenue]], Total Cost,Total Profit, \table [[Marginal], [ Revenue** Output per Month Price 0 $1,000 100 Total Revenue $0 1,000 100,000 Total Cost Total Profit Marginal Revenue* Average Revenue* Profit per Cost Total Cost Unit (Price - ATC) $60,000 -$60,000 90,000 10,000 $1,000 $300 $900 $100 200 1,000 200,000 130,000 70,000 1,000 400 650 350 300 1,000 300,000 180,000 120,000 1,000 500 600 400 400 1,000 400,000 240,000 160,000 1,000 600 600 400 500 1,000 500,000 320,000 180,000 1,000 800 640 360 600 1,000 600,000 420,000 180,000 1,000 1,000 700 300 700 1,000 700,000 546,000 154,000 1,000 1,260 780 220 800 1,000 800,000 720,000 80,000 1,000 1,740 900 100 900 1,000 900,000 919,800 -19,800 1,000 1,998 1,022 -22 "Note that output levels are calibrated in hundreds in this example; that's why we have divided the change in total costs and revenues from one output level to another by 100 to calculate marginal revenue and marginal…