A local post office sorts letters by postal code.During the month of July,200,000 letters were sorted.The cost of sorting includes the following:
$\begin{array}{lr}
\text { Direct labour } & \$ 12,000 \
\text { Overhead } & 8,000 \
\text { Total } & \$ 20,000 \
\end{array}$
a.Explain why process costing is appropriate for this operation.
b.Calculate the cost per letter for this operation.
c.There are no direct materials used for the sorting operation.Is the absence of direct materials typical of services? If not,provide examples of services that use direct materials.

Question

A local post office sorts letters by postal code.During the month of July,200,000 letters were sorted.The cost of sorting includes the following:
 $\begin{array}{lr}
\text { Direct labour } & \$ 12,000 \
\text { Overhead } & 8,000 \
\text { Total } & \$ 20,000 \
\end{array}$ 
a.Explain why process costing is appropriate for this operation.
b.Calculate the cost per letter for this operation.
c.There are no direct materials used for the sorting operation.Is the absence of direct materials typical of services? If not,provide examples of services that use direct materials.

Quizplus · Accepted Answer

The Answer of A local post office sorts letters by postal code.During the month of July,200,000 letters were sorted.The cost of sorting includes the following:
 $\begin{array}{lr}
\text { Direct labour } & \$ 12,000 \
\text { Overhead } & 8,000 \
\text { Total } & \$ 20,000 \
\end{array}$ 
a.Explain why process costing is appropriate for this operation.
b.Calculate the cost per letter for this operation.
c.There are no direct materials used for the sorting operation.Is the absence of direct materials typical of services? If not,provide examples of services that use direct materials.

A Local Post Office Sorts Letters by Postal Code Direct labour $12,000 Overhead 8,000 Total $20,000\begin{array}{lr}\text { Direct labour } & \$ 12,000 \\\text { Overhead } & 8,000 \\\text { Total } & \$ 20,000 \\\end{array} Direct labour Overhead Total ​$12,0008,000$20,000​

A Local Post Office Sorts Letters by Postal Code $\begin{array}{lr}\text { Direct labour } & \$ 12,000 \\\text { Overhead } & 8,000 \\\text { Total } & \$ 20,000 \\\end{array}$