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

question 10

Multiple Choice

Baylor Corporation had the following activities, traceable costs, and physical flow of driver units: $\begin{array}{llll}&\text { Traceable }&\text { Physical Flow of }\\\text { Activities }&\text { Costs }&\text { DriverUnits }\\\hline\text { Account inquiry (hours) } & \$ 8,000 & 500 \text { hours } \\\text { Account billing(lines) } & 5,600 & 200,000 \text { lines } \\\text { Account verification (accounts) } & 3,000 & 2,000 \text { accounts } \\\text { Correspondence (letters) } & 1,000 & 200 \text { letters }\end{array}$ The above activities are used by departments A and B as follows: $\begin{array}{llll}&A&B\\\text { Account inquiry (hours) } & 50 \text { hours } & 80 \text { hours } \\\text { Account billing (lines) } & 25,000 \text { lines } & 20,000 \text { lines } \\\text { Account verification (accounts) } & 200 \text { contracts } & 100 \text { contracts } \\\text { Correspondence (letters) } & 20 \text { letters } & 100 \text { letters }\end{array}$ The account inquiry cost assigned to Department A is:

• A) $20,800
• B) $800
• C) $1,280
• D) $8,000

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Definitions:

Accounts Receivable Financing

A type of financing arrangement in which a company uses its receivables as collateral for a loan, effectively selling its right to future payments in exchange for immediate cash.

Factored Receivables Financing

A financial transaction in which a business sells its accounts receivable to a third party at a discount in exchange for immediate cash.

Banker's Acceptance

A short-term financial instrument issued by a company that is guaranteed by a commercial bank, commonly used in international trade.

Inventory Period

The average time it takes for inventory to be sold and replaced during a given period.