Assume That the Accounts Payable Department of a Company Has

question 149

Essay

Assume that the accounts payable department of a company has 10 clerks; each one is paid $25,000 per year ($250,000 total clerical salaries). Six of the clerks spend the following percentages of time on the three activities:
20% of time on processing payments
30% of time matching invoices, receiving documents, and billing statement
50% of time correcting errors in the various documents
One clerk, the head clerk, spends 50% of her time on administrative duties and the remainder on error correction. The remaining three clerks spend 30% of their time on processing payments and the remaining 70% of their time on matching documents.
Long distance telephone costs of $1,700 are directly traced to the activity "correcting errors."
A) Assign the clerical salary cost to each of the three activities and to administration.
B) Calculate the total cost of the "correcting errors" activity.

• A) Assign the clerical salary cost to each of the three activities and to administration.
• B) Calculate the total cost of the "correcting errors" activity.

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