Question

Bean​ Brewers, Inc., a manufacturer of coffee​ makers, had the following​ activities, allocated​ costs, and allocation​ bases: Activities Allocated Costs Allocation Base Account inquiry​ (hours) hours Account billing​ (lines) lines Account verification​ (accounts) accounts Correspondence​ (letters) letters The above activities are carried out at two of its regional offices. Activities Northeast Office Midwest Office Account inquiry​ (hours) hours hours Account billing​ (lines) lines lines Account verification​ (accounts) accounts accounts Correspondence​ (letters) letters letters How much of the correspondence cost will be assigned to the Northeast​ Office? (Round any intermediate calculations to the nearest cent and your final answer to the nearest​ dollar.)

Answer 1

Answer: B. $438

Explanation:

Correspondence Cost = Number of letters * Predetermined cost of correspondence  

Predetermined cost of correspondence = Allocated cost/ Allocated base

= 14,000/1,600 letters

= $8.75 per letter

Northeast Office used 50 letters for correspondence.

Cost = 8.75 * 50

= $437.50

= $438