(Q.6) Mertens Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry hours $200,000 10,000 hours Account billing lines $140,000 4,000,000 lines Account verification accounts $75,000 40,000 accounts Correspondence letters $ 25,000 4,000 letters Total costs $440,000 The above activities are used by Departments A and B as follows: Department A Account inquiry hours 2,000 hours Account billing lines 400,000 lines Account verification accounts 10,000 accounts Correspondence letters 1,000 letters Department B 4,000 hours 200,000 lines 8,000 accounts 1,600 letters a. Calculate the cost allocation rates. Activity Allocation Rate Account inquiry Account billing Account verification Correspondence b. Allocate the activity costs to the departments. Allocated costs Activity Department A Department B Account inquiry Account billing Account verification Correspondence Total costs