Question

Flannery​ Company, a manufacturer of small​ appliances, had the following​ activities, allocated​ costs, and allocation​ bases: Activities Allocated Costs Allocation Base Account inquiry​ (hours) $ 75 comma 000 2 comma 700 hours Account billing​ (lines) $ 41 comma 000 17 comma 000 lines Account verification​ (accounts) $ 11 comma 000 29 comma 000 accounts Correspondence​ (letters) $ 10 comma 000 1 comma 400 letters The above activities are carried out at two of its regional offices. Activities Northeast Office Midwest Office Account inquiry​ (hours) 140 hours 250 hours Account billing​ (lines) 14 comma 000 lines 8 comma 000 lines Account verification​ (accounts) 1 comma 300 accounts 650 accounts Correspondence​ (letters) 40 letters 120 letters What is the cost per letter for the correspondence​ activity? (Round your answer to the nearest​ cent.) A. $ 29.29B. $ 7.14C. $ 0.38D. $ 3.70

Answer 1

B. $ 7.14

Step-by-step explanation:

We will divide the total cost pool by the activity drive to get the amount of the predeterminated overhead rate for the correspondence activity

Cost pool: 10,000

allocation base total: 1,400 letters

activity rate 10,000 / 1,400 = 7.14