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

question 107

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 account for the account verification activity?

• A) $30.00
• B) $0.50
• C) $2.25
• D) $0.75

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Definitions:

Material Handling

The process of moving, safeguarding, storing, managing, and overseeing materials and products during production, storage, distribution, use, and disposal stages.

Departmental Work Flows

The sequence of processes through which a work or project passes from initiation to completion within specific departments.

Flow Matrix

A tool used in process management and operations research to depict the flow of materials, products, or information between process steps or departments.

Cycle Time

The total time from the beginning to the end of a process, indicating the speed at which products are produced or services are delivered.