Extreme Manufacturing Company provides the following ABC costing information: Activities ...
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Accounting
Extreme Manufacturing Company provides the following ABC costing information:
| Activities | Total Costs | Activity dash cost drivers | |
| Account inquiry | $800,000 | 16 comma 00016,000 hours | |
| Account billing | $105,000 | 7 comma 000 comma 0007,000,000 lines | |
| Account verification accounts | $75,000 | 40 comma 00040,000 accounts | |
| Correspondence letters | $40,250 | 7 comma 0007,000 letters | |
| Total costs | $1,020,250 |
The above activities are used by Departments A and B as follows:
| Department A | Department B | ||
| Account inquiry hours | 2,800 hours | 4 comma 3004,300 hours | |
| Account billing lines | 800,000 lines | 650 comma 000650,000 lines | |
| Account verification accounts | 14,000 accounts | 12 comma 00012,000 accounts | |
| Correspondence letters | 1,100 letters | 1 comma 5001,500 letters |
How much of account verification costs will be assigned to Department A?
A.
$22,500
B.
$37,500
C.
$26,250
D.
$ 75,000
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