National Bank showed the following information regarding overhead costs: Overhea

Question

National Bank showed the following information regarding overhead costs: Overhead Activity Account inquiry Account billing Account verification Correspondence Total Activity Cost Activity Cost Driver Quantity of Activity $60,000Hours spent $30,000Billing lines used $15,000Accounts verified $10,000Letters issued 2,000 20,000 20,000 1,000 National Bank has determined the usage of the overhead activities by its two departments, P and Q as follows: Account inquiry Account billing Account verification Correspondence Number of Customers Department P 1,500 hours 12,000 lines 14,000 accounts 200 letters Department Q 500 hours 8,000 lines 6,000 accounts 800 letters 10,000 3,000 Required 1. Compute the activity rates for the four activities. Label them and show your computations. 2. Compute the overhead cost to be allocated to Department P and Department Q. Show the computation for each of the four activities and total 3. Compute the over head cost per customer for Department P and Department Q. Label the department and show the computation.

Explanation / Answer

1) Calculate activity rate :

2) Calculate overhead cost per department :

3) Calculate cost per customer for department P and department Q

Activity Activity rate Account inquiry (60000/2000) 30 per hour Account billing (30000/20000) 1.5 per line Account verfication (15000/20000) 0.75 per customer Correspondence (10000/1000) 10 per letters

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.