Merriman Company provides the following Activity-based Costing (ABC costing) information for 201X:

	Estimated	Estimated
	Overhead	Activity Measure Level
Activity (Cost Pool)	Costs	(Allocation Base)
Account inquiry hours	$400,000	10,000	Hours
Account billing lines	$280,000	4,000,000	Lines
Account verification	$150,000	40,000	Accounts
Correspondence letters	$50,000	4,000	Letters
Total overhead costs	$880,000

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

	ACTUAL
	Activity Measure Level
Activity (Cost Pool)	Dept. A	Dept. B
Account inquiry hours	2,000	4,000	hours
Account billing lines	400,000	200,000	lines
Account verification	10,000	8,000	accounts
Correspondence letters	1,000	1,600	letters

1- How much of the $400,000 Account Inquiry Hours activity cost pool amount will be allocated (aka applied) to Dept. A?

a. $133,333

b. $176,000

c. $240,000

d. $80,000

2- How much of the $150,000 Account Verification activity cost pool amount will be allocated (aka applied) to Dept. B?

a. $20,690

b. $66,667

c. $54,000

d. $30,000

3- Assume that Merriman Company has not yet decided to implement the ABC Costing system that was laid-out in the provided information for this series of questions, and, instead, uses a single plant wide manufacturing overhead rate (simple system of allocation) to allocate (apply) manufacturing overhead. In this simple system of allocation Merriman has selected account inquiry hours as the allocation base (cost driver of the manufacturing overhead). What is Merrimans predetermined, single plant-wide manufacturing overhead rate within this simple system of allocation (rounded to the nearest penny, if necessary)?

a. $66.67

b. $146.67

c. $40.00

d. $88.00