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) $ 63,000 2,900 hours
Account billing​ (lines) $ 38,000 20,000 lines
Account verification​ (accounts) $ 12,000 30,000 accounts
Correspondence​ (letters) $ 13,000 1,600 letters.

The above activities are carried out at two of its regional offices.

Activities Northeast Office Midwest Office
Account inquiry​ (hours) 100 hours 200 hours
Account billing​ (lines) 10,000 lines 9,000 lines
Account verification​ (accounts) 1,000 accounts 650 accounts
Correspondence​ (letters) 50 letters 110 letters

What is the cost per letter for the correspondence​ activity?

Answer 1

$8.125

Step-by-step explanation:

The computation of the cost per letter for the correspondence​ activity is shown below:

= Total cost of correspondence in letters ÷ number of letters

= $13,000 ÷ 1,600 letters

= $8.125

By dividing the total cost with the number of letters we can get the cost per letter for the correspondence​ activity and we applied the same i.e shown above