Pitt Jones Company had the following activities, allocated costs, and allocation

Question

Pitt Jones Company had the following activities, allocated costs, and allocation bases Allocated Costs Allocation Base 2,000 hours 20,000 lines 20,000 accounts Activities Account inquiry hours) $60,000 Account billing (lines) $30,000 Account verification $15,000 (accounts) Correspondence letters) $10,000 1,000 letters I he above acuvnes are used by aepartinents and Account inquiry (hours) Account billing lines) Account verification (accounts) 1,000 accounts Corre Department P 100 hours 10,000 lines Department Q 200 hours 7000 lines 600 accounts 100 letters ence (letters) 50letters How much of the account verification costs will be assigned to Department P? O $800 O $2,500 O $750 O $1,500

Explanation / Answer

C. $750

Account verification costs assigned to Department P = ($15,000 / 20,000) x 1,000 = $750

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