Question
Premium Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry $200,000 10,000 Account billing $140,000 4,000,000 Account verification accounts $75,000
Premium Company provides the following ABC costing information:
Activities | Total Costs | Activity-cost drivers |
Account inquiry | $200,000 | 10,000 |
Account billing | $140,000 | 4,000,000 |
Account verification accounts | $75,000 | 40,000 |
Correspondence letters | $ 25,000 | 4,000 |
Total costs | $440,000 |
|
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 | 400,000 lines | 250,000 lines |
Account verification accounts | 10,000 accounts | 8,000 accounts |
Correspondence letters | 1,200 letters | 1,600 letters |
1 How much of account verification costs will be assigned to Department A ? 2) How much of correspondence costs will be assigned to Department A? 3) How much of the total costs will be assigned to Department A?
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