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

question 52

Multiple Choice

Pitt Jones Company had the following activities, allocated costs, and allocation bases: $$\begin{array} { | l | r | r | } \hline \text { Activities } & \text { Allocated Costs } & \text { Allocation Base } \\\hline \text { Account inquiry (hours) } & \$ 60,000 & 2,000 \text { hours } \\\hline \text { Account billing (lines) } & \$ 30,000 & 20,000 \text { lines } \\\hline \text { Account verification (accounts) } & \$ 15,000 & 20,000 \text { accounts } \\\hline \text { Correspondence (letters) } & \$ 10,000 & 1,000 \text { letters } \\\hline\end{array}$$ The above activities are carried out at two of their regional offices.
$$\begin{array} { | l | r | r | } \hline & \text { Northeast Office } & \text { Midwest Office } \\\hline \text { Account inquiry (hours) } & 100 \text { hours } & 200 \text { hours } \\\hline \text { Account billing (lines) } & 10,000 \text { lines } & 7,000 \text { lines } \\\hline \text { Account verification (accounts) } & 1,000 \text { accounts } & 600 \text { accounts } \\\hline \text { Correspondence (letters) } & 50 \text { letters } & 100 \text { letters } \\\hline\end{array}$$
- What is the cost per hour for the account inquiry activity?

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

Identify the role of opportunity costs in economic decision-making and resource allocation.

Analyze the impact of inefficient resource use on an economy's production capabilities.

Interpret the law of increasing opportunity costs through the shape of the production possibilities curve.

Distinguish between attainable and unattainable points on the production possibilities curve.

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Definitions:

Mean

The average of a set of numerical values, calculated as the sum of the values divided by the number of values.

Mean

The arithmetic average of a set of numbers, calculated by adding them together and dividing by the number of quantities.

Point Estimate

A single value estimate of a population parameter that serves as the best guess or prediction of the parameter.

Confidence Limits

Confidence limits define the range within which a population parameter is estimated to lie with a certain level of confidence.