Question

The accounting department invoicing activity includes activities such as processing the invoice, printing, obtaining approval and mailing. The cost of the assets and personnel to staff these activities is $75,000. With this level of staffing and assets, the company has 124,800 minutes of capacity per year within the invoicing activity. If it takes, on average, 4 minutes per invoice, what is the cost per transaction?

Answer 1

The cost per transaction is $2.40.

Step-by-step explanation:

To find the cost per transaction, we need to calculate the total number of invoices that can be processed with the given capacity. The company has 124,800 minutes of capacity per year, and it takes an average of 4 minutes per invoice. So, the total number of invoices that can be processed is 124,800 / 4 = 31,200.

To find the cost per transaction, we divide the total cost of assets and personnel by the number of invoices. The cost is $75,000, and the number of invoices is 31,200. So, the cost per transaction is $75,000 / 31,200 = $2.40.