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7 years ago
Flannery Company, a manufacturer of small appliances, had the following activities, allocated costs, and allocation bases:

Activities   Allocated Costs   Allocation Base
Account inquiry (hours)   $79,000   2,700 hours
Account billing (lines)   $45,000   16,000 lines
Account verification (accounts)   $16,000   20,000 accounts
Correspondence (letters)   $12,000   1,000 letters

The above activities are carried out at two of its regional offices.

Activities   Northeast Office   Midwest Office
Account inquiry (hours)   180 hours   200 hours
Account billing (lines)   10,000 lines   9,000 lines
Account verification (accounts)   1,600 accounts   650 accounts
Correspondence (letters)   60 letters   150 letters

What is the cost per letter for the correspondence activity? (Round your answer to the nearest cent.)
A) $12.00
B) $4.44
C) $45.00
D) $0.80
Textbook 
Horngren's Financial & Managerial Accounting, The Financial Chapters

Horngren's Financial & Managerial Accounting, The Financial Chapters


Edition: 5th
Authors:
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