Hinckley & Granger Company Had the Following Activities,estimated Indirect Activity

question 119

Multiple Choice

Hinckley & Granger Company had the following activities,estimated indirect activity costs,and allocation bases: $\begin{array} { | l | r | r | } \hline \text { Activities } & \text { Indirect Activity Costs } & \text { Allocation Base } \\\hline \text { Account inquiry (hours) } & \$ 75,000 & 2,500 \\\hline \text { Account billing (lines) } & \$ 45,000 & 30,000 \\\hline \text { Account verification (accounts) } & \$ 18,000 & 24,000 \\\hline \text { Correspondence (letters) } & \$ 40,000 & 4,000 \\\hline\end{array}$ Hinckley & Granger uses activity based costing.
The above activities are used by Departments P and Q as follows:
$\begin{array} { | l | r | r | } \hline & \text { Department P } & \text { Department Q } \\\hline \text { Account inquiry (hours) } & 300 & 600 \\\hline \text { Account billing (lines) } & 8,000 & 6,000 \\\hline \text { Account verification (accounts) } & 5,000 & 4,500 \\\hline \text { Correspondence (letters) } & 500 & 600 \\\hline\end{array}$
- What is the cost per driver unit for the account inquiry activity?

• A)$18.75
• B)$ 1.50
• C)$10.00
• D)$30.00

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Definitions:

Invoice

A listing of products or services rendered that is used when billing for that product or service.

Shipment

The act of sending goods or cargo from one place to another via a variety of modes of transport.

Purchase Agreement

A legal document outlining the terms and conditions under which a sale is made, including details of the buyer, seller, property, and price.

Purchasing Mistakes

Errors or poor decisions made during the process of buying goods or services.