QUESTION 7

1. Mertens Company provides the following ABC costing information:

   Activities Total Costs Activity-cost drivers

   Account inquiry hours $200,000 8,000 hours

   Account billing lines $140,000 2,000,000 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 Department B

   Account inquiry hours 2,500 hours 4,300 hours

   Account billing lines 400,000 lines 630,000 lines

   Account verification accounts 10,000 accounts 8,000 accounts

   Correspondence letters 1,000 letters 1,600 letters

   How much of the total costs will be assigned to Department B?

		$79,000
		$115,500
		$112,000
		$176,600