Question

Account verification accounts 5,000 accounts 3,000 accounts Correspondence letters 1,000 letters 1,400 letters How much of the account billing cost will be assigned to Department B

Answer 1

$24,750

Step-by-step explanation:

The computation of the account billing cost assigned to department B is shown below;

Computation of the activity rate of account billing cost pool

Activity rate = Account billing cost ÷ Expected account billing lines

= $220,000 ÷ 4,000,000

= $0.055 per line

Now Calculation for account billing cost assigned to department B is

Cost assigned = Activity rate × Activity of Department B

= $0.055 × 450,000

= $24,750