Pitt Jones Company, a manufacturer of small appliances, had the following activi
ID: 2342598 • Letter: P
Question
Pitt Jones Company, a manufacturer of small appliances, had the following activities, allocated costs, and allocation bases:
Activities
Allocated Costs
Allocation Base
Account inquiry (hours)
$61,000
2,600 hours
Account billing (lines)
$32,000
18,000 lines
Account verification (accounts)
$16,000
24,000 accounts
Correspondence (letters)
$13,000
1,000 letters
The above activities are carried out at two of its regional offices.
Activities
Northeast Office
Midwest Office
Account inquiry (hours)
120 hours
200 hours
Account billing (lines)
10,000 lines
9,000 lines
Account verification (accounts)
1,800 accounts
600 accounts
Correspondence (letters)
70 letters
150 letters
What is the cost per line for the account billing activity? (Round your answer to the nearest cent.)
Activities
Allocated Costs
Allocation Base
Account inquiry (hours)
$61,000
2,600 hours
Account billing (lines)
$32,000
18,000 lines
Account verification (accounts)
$16,000
24,000 accounts
Correspondence (letters)
$13,000
1,000 letters
Explanation / Answer
Cost per line for billing activity = Total Billing Activity Cost / No. of Lines
= $32000 / 18000
= $1.78 Per line