Dickerson Corporation Had the Following Activities, Traceable Costs, and Physical

question 113

Multiple Choice

Dickerson Corporation had the following activities, traceable costs, and physical flow of driver units: $\begin{array}{llll}& \text { Traceable } & \text { Physical Flow of } \\\text { Activities } & \text { Costs } & \text { Driver Units }\\\text { Acc ount inquiry (hours) } & \$ 10,000 & 500 \text { hours } \\\text { Acc ount billing (lines) } & 5,600 & 200,000 \text { lines } \\\text { Account verification (accounts) } & 3,000 & 2,000 \text { accounts } \\\text { Correspondence (letters) } & 1,000 & 200 \text { letters }\end{array}$ The above activities are used by departments A and B as follows: $$\begin{array} { l l l } & \underline { \text { A } } & \underline { \text { B } } \\\text { Acc ount inquiry (hours) } & 50 \text { hours } & 80 \text { hours } \\\text { Account billing (lines) } & 25,000 \text { lines } & 20,000 \text { lines } \\\text { Account verification (accounts) } & 200 \text { contracts } & 100 \text { contracts } \\\text { Correspondence (letters) } & 20 \text { letters } & 100 \text { letters }\end{array}$$ The cost per driver unit for the account inquiry activity is:

• A) $5.00
• B) $20.00
• C) $0.028
• D) $1.50

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Definitions:

Indirect Method

A technique used in cash flow statements to adjust net income for changes in non-cash items to calculate net cash from operating activities.

Statement of Cash Flows

This report details the fluctuations in balance sheet accounts and how income influences cash and cash equivalents, categorizing these changes into operating, investing, and financing sections.

Operating Activities

Activities that relate to the primary operations of a company, influencing its net cash flow from operating income.

Indirect Method

A way of reporting net cash flow from operating activities in the statement of cash flows by adjusting net income for changes in working capital items and non-cash transactions.