ABC Corporation has three service departments with the following costs and activ

Question

ABC Corporation has three service departments with the following costs and activity base Co Activity Base for Allocation $200,000 number of cooies Graphics Production of invoices 500,000 processed Personnel Department 00,000 number of employees ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information are as follows Micro Macre Super $700,000 $850,000 $650,000 70.00 Direct revenues t operating expenses 100,000 of copies made lumber of invoices processed of employees What is the service department charge rate for the Accounting Department? O a. $0.004 b. $714 c.$250 Od. $625 Previous Next

Explanation / Answer

The Serivce Department's charge rate for Accounting Department = Cost / Total Number of Invoices processed

= $ 500,000 / ( 700 + 800 + 500)

= $ 250

Hence the correct answer is c. $ 250

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