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Pitt Jones Company had the following activities, allocated costs, and allocation bases: Cost Pool Allocated Costs Expected Use of Drivers Account inquiry (hours) $60,000 2,000
Pitt Jones Company had the following activities, allocated costs, and allocation bases: Cost Pool Allocated Costs Expected Use of Drivers Account inquiry (hours) $60,000 2,000 hours Account billing (lines) $30,000 20,000 lines Account verification (accounts) $15,000 20,000 accounts Correspondence (letters) $10,000 1,000 letters The above activities are carried out at two of their regional offices. Northeast Office Midwest Office Account inquiry (hours) 100 hours 200 hours Account billing (lines) 10,000 lines 7,000 lines Account verification (accounts) 1,000 accounts 600 accounts Correspondence (letters) 50 letters 100 letters Northeast Office Midwest Office Account inquiry (hours) 100 hours 200 hours Account billing (lines) 10,000 lines 7,000 lines Account verification (accounts) 1,000 accounts 600 accounts Correspondence (letters) 50 letters 100 letters What is the activity rate for the correspondence activity? $0.75 $25.00 $30.50 $10.00 Question 25 Use of activity-based costing will result in the development of one overhead rate based on direct labor hours. O multiple activity-based overhead rates. one plantwide activity-based overhead rate. no overhead rates; overhead rates are not used in activity-based costing. Question 1 The following four steps are necessary in order to use an activity-based costing system: 1. Compute the allocation rate for each activity. 2. Identify activities and estimate their total costs. 3. Identify the cost driver for each activity and then estimate the quantity of each driver's allocation base. 4. Allocate the indirect costs to the cost object. In what order are these steps performed? 2,3,1,4 1,2,3,4 2,1,3,4 O 3,1,2,4
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