Answer:
the account inquiry cost that would be assigned to the Midwest Office is $8250
Explanation:
Galley Company, a manufacturer of small kitchen appliances, had the following activities, allocated costs, and allocation bases: Activities Allocated Costs Allocation Base Account inquiry (hours) $66,000 2000 hours Account billing (lines) $47,000 15,000 lines Account verification (accounts) $17,000 23,000 accounts Correspondence (letters) $14,000 1400 letters The above activities are carried out at two of its regional offices. Activities Northeast Office Midwest Office Account inquiry (hours) 100 hours 250 hours Account billing (lines) 12,000 lines 8000 lines Account verification (accounts) 1500 accounts 700 accounts Correspondence (letters) 40 letters 100 letters
How much of the account inquiry cost will be assigned to the Midwest Office?
Account inquiry is the review of a financial account whether a credit account or a depository account. Account inquiry consists of all past records, transactions or entries relating to that financial account and is normally done when a company wants to collect a debt.
Given that:
Number of activities in the midwest = 250 hours,
Account inquiry = $66000 for 2000 hours.
Therefore cost per hour = $66000 / 2000 hours = $33 per hour
Cost of account inquiry = Cost per hour × Number of activities = $33 per hour × 250 hours = $8250
the account inquiry cost that will be assigned to the Midwest Office is $8250
