Answer the following questions using the information below:
Mertens Company provides the following ABC costing information:
The above activities are used by Departments A and B as follows:

-How much of the account billing cost will be assigned to Department B?
A)$14,000
B)$140,000
C)$7,000
D)None of these answers are correct.

Question

Answer the following questions using the information below:
Mertens Company provides the following ABC costing information:
  The above activities are used by Departments A and B as follows:
 
-How much of the account billing cost will be assigned to Department B?
A)$14,000 
B)$140,000 
C)$7,000 
D)None of these answers are correct.

Quizplus · Accepted Answer

To calculate the account billing cost assigned to Department B:
Account Billing Cost = (Total Cost for Account Billing / Total Units of Cost Driver) x Units of Cost Driver Used by Department B
Account Billing Cost = ($140,000 / 20,000) x 10,000
Account Billing Cost = $7,000
Therefore, the answer is C) $7,000.

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