Potter​ & Weasley Company had the following​ activities, estimated indirect activity​ costs, and allocation​ bases: Activities Indirect Activity Costs Allocation Base Account inquiry​ (hours) $86,200 2,900 Account billing​ (lines) $53,000 32,000 Account verification​ (accounts) $36,250 23,500 Correspondence​ (letters) $85,000 11,000 Potter​ & Weasley uses activity based costing. The above activities are used by Departments P and Q as​ follows: Department P Department Q Account inquiry​ (hours) 400 800 Account billing​ (lines) ​10,000 ​4,000 Account verification​ (accounts) ​6,000 ​7,000 Correspondence​ (letters) ​1,000 ​2,000 What is the cost per driver unit for the account inquiry​ activity? (Round all answers to two decimal​ places.) A. $29.72 B. $7.73 C. $7.84 D.

Answer :

Answer:

A. $29.72

Explanation:

The calculation of cost per driver unit is shown below:-

Cost per driver unit = Indirect cost relating to account inquiry ÷ Allocation base relating to account inquiry

= $86,200 ÷ 2,900

= $29.72 per hour

Therefore for computing the cost per driver unit we simply divide the Indirect cost relating to account inquiry by allocation base relating to account inquiry.

Other Questions