Pitt Jones Company Had the Following Activities, Allocated Costs, and Allocation

question 122

Multiple Choice

Pitt Jones Company had the following activities, allocated costs, and allocation bases:
$\begin{array}{|l|r|r|r|}\hline \text { Activities } & \text { Allocated Costs } & \text { Allocation Base } \\\hline \text { Account inquiry (hours) } & \$ 60,000 & 2,000 \text { hours } \\\hline \text { Account billing (lines) } & \$ 30,000 & 20,000 \text { lines } \\\hline \text { Account verification (accounts) } & \$ 15,000 & 20,000 \text { accounts } \\\hline \text { Correspondence (letters) } & \$ 10,000 & 1,000 \text { letters }\\\hline\end{array}$

The above activities are carried out at two of their regional offices.
$$\begin{array} { | l | r | r | } \hline & \text { Northeast Office } & { \text { Midwest Office } } \\\hline \text { Account inquiry (hours) } & 100 \text { hours } & 200 \text { hours } \\\hline \text { Account billing (lines) } & 10,000 \text { lines } & 7,000 \text { lines } \\\hline \text { Account verification (accounts) } & 1,000 \text { accounts } & 600 \text { accounts } \\\hline \text { Correspondence (letters) } & 50 \text { letters } & 100 \text { letters } \\\hline\end{array}$$
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What is the cost per unit for the account inquiry activity?

• A) $0.75
• B) $30.00
• C) $10.00
• D) $1.50

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Definitions:

Secondary Market

The secondary market is where investors buy and sell securities they own from each other, rather than directly from the issuing company, including stock exchanges and over-the-counter markets.

Stock Exchange

A marketplace where stocks and other securities are bought and sold, facilitating the transfer of securities among investors.

Initial Public Offering

The first sale of stock by a private company to the public, typically used to raise capital for expansion.

Common Shareholder

A common shareholder is an individual or entity that holds common stock in a corporation, granting them voting rights and a share in the company's profits through dividends.