Flannery Company, a manufacturer of small appliances, had the following activities, allocated costs, and allocation bases: Activities Allocated Costs Allocation Base Account inquiry (hours) $ 75 comma 000 2 comma 700 hours Account billing (lines) $ 41 comma 000 17 comma 000 lines Account verification (accounts) $ 11 comma 000 29 comma 000 accounts Correspondence (letters) $ 10 comma 000 1 comma 400 letters The above activities are carried out at two of its regional offices. Activities Northeast Office Midwest Office Account inquiry (hours) 140 hours 250 hours Account billing (lines) 14 comma 000 lines 8 comma 000 lines Account verification (accounts) 1 comma 300 accounts 650 accounts Correspondence (letters) 40 letters 120 letters What is the cost per letter for the correspondence activity? (Round your answer to the nearest cent.) A. $ 29.29B. $ 7.14C. $ 0.38D. $ 3.70

Question

Adelaide

Business

9 November, 15:44

Flannery Company, a manufacturer of small appliances, had the following activities, allocated costs, and allocation bases: Activities Allocated Costs Allocation Base Account inquiry (hours) $ 75 comma 000 2 comma 700 hours Account billing (lines) $ 41 comma 000 17 comma 000 lines Account verification (accounts) $ 11 comma 000 29 comma 000 accounts Correspondence (letters) $ 10 comma 000 1 comma 400 letters The above activities are carried out at two of its regional offices. Activities Northeast Office Midwest Office Account inquiry (hours) 140 hours 250 hours Account billing (lines) 14 comma 000 lines 8 comma 000 lines Account verification (accounts) 1 comma 300 accounts 650 accounts Correspondence (letters) 40 letters 120 letters What is the cost per letter for the correspondence activity? (Round your answer to the nearest cent.) A. $ 29.29B. $ 7.14C. $ 0.38D. $ 3.70

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Answers (1)

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Elianna Werner · Answer 1

B. $ 7.14

Explanation:

We will divide the total cost pool by the activity drive to get the amount of the predeterminated overhead rate for the correspondence activity

Cost pool: 10,000

allocation base total: 1,400 letters

activity rate 10,000 / 1,400 = 7.14