Trang Company had the following activities, allocated costs, and allocation base
ID: 2456713 • Letter: T
Question
Trang Company had the following activities, allocated costs, and allocation bases:
Activities
Allocated Costs
Allocation Base
Account inquiry (hours)
$60,000
2,000 hours
Account billing (lines)
$30,000
20,000 lines
Account verification (accounts)
$15,000
20,000 accounts
Correspondence (letters)
$10,000
1,000 letters
The above activities are carried out at two of their regional offices.
Northeast Office
Midwest Office
Account inquiry (hours)
100 hours
200 hours
Account billing (lines)
10,000 lines
7,000 lines
Account verification (accounts)
1,000 accounts
600 accounts
Correspondence (letters)
50 letters
100 letters
What is the cost per line to Trang for the account billing activity?
A) $1.50
B) $30.00
C) $1.60
D) $1.43
Activities
Allocated Costs
Allocation Base
Account inquiry (hours)
$60,000
2,000 hours
Account billing (lines)
$30,000
20,000 lines
Account verification (accounts)
$15,000
20,000 accounts
Correspondence (letters)
$10,000
1,000 letters
Explanation / Answer
Cost per line for account billing Activity = $30000/20000 =$1.50
Thus answer is (A) $1.50
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