Answer the Following Questions Using the Information Below:
Katoomba Company

question 8

Multiple Choice

Answer the following questions using the information below:
Katoomba Company provides the following ABC costing information:
$$\begin{array}{l}\begin{array} { l c l } \text { Activities } & \text { Total Costs } & \text { Activity-cost Drivers } \\\text { Account inquiry hours } & \$ 800000 & 20000 \text { hours } \\\text { Account billing lines } & \$ 560000 & 8000 \text { 000 lines } \\\text { Account verification accounts } & \$ 300000 & 80000 \text { accounts } \\\text { Correspondence letters } & \$ 100000 & 8000 \text { letters } \\\quad \text { Total costs } & \$ 1760000 &\end{array}\\\\\text { The above activities are uæed by Departments } \mathrm { A } \text { and } \mathrm { B } \text { as follows: }\\\\\begin{array} { l l l } & \text { Department A } & \text { Department B } \\\text { Account inquiry hours } & 2000 \text { hours } & 8000 \text { hours } \\\text { Account billing lines } & 400 \text { o00 lines } & 200000 \text { lines } \\\text { Account verification accounts } & 20000 \text { accounts } & 8000 \text { accounts } \\\text { Correspondence letters } & 1000 \text { letters } & 1600 \text { letters }\end{array}\end{array}$$
-How much of the correspondence costs will be assigned to Department B?

• A)$100 000
• B)$1600
• C)$12 500
• D)$20 000

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Definitions:

Organizational Effectiveness

The measure of how successfully an organization achieves its goals and objectives through the efficient use of resources.

Divisional Departmentalization

Organizational structure where divisions are formed based on products, services, or markets, with each division containing its own resources and functions.

Functional Departmentalization

An organizational structure where the company is divided into departments based on their functions or roles, such as marketing, finance, human resources, and more.

Dual Lines

A structure or system that involves two parallel paths or channels, which can facilitate processes or communication.