Question
Premium Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry $200,000 6,500 hours Account billing $140,000 650,000 lines Account verification
Premium Company provides the following ABC costing information:
Activities
Total Costs
Activity-cost drivers
Account inquiry
$200,000
6,500 hours
Account billing
$140,000
650,000 lines
Account verification accounts
$75,000
20,000 accounts
Correspondence letters
$ 25,000
2,800 letters
Total costs
$440,000
The above activities are used by Departments A and B as follows:
Activities
Department A
Department B
Account inquiry hours
2,500 hours
4,000 hours
Account billing lines
400,000 lines
250,000 lines
Account verification accounts
12,000 accounts
8,000 accounts
Correspondence letters
1,200 letters
1,600 letters
How much of account verification costs will be assigned to Department A?
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