Hinckley & Granger Company had the following activities,estimated indirect activity costs,and allocation bases:

Hinckley & Granger uses activity-based costing.
The above activities are used by Departments P and Q as follows:

How much of the account verification costs will be assigned to Department P?

Question

Hinckley & Granger Company had the following activities,estimated indirect activity costs,and allocation bases:

Hinckley & Granger uses activity-based costing.
The above activities are used by Departments P and Q as follows:

How much of the account verification costs will be assigned to Department P?

Quizplus · Accepted Answer

To allocate the account verification costs to Department P, we need to use the allocation rate of $7.50 per verification ($30,000 / 4,000 verifications). Department P had 500 verifications, so the cost assigned to Department P would be:
$7.50 per verification x 500 verifications = $3,750
Therefore, the correct answer is option D.

Hinckley & Granger Company Had the Following Activities,estimated Indirect Activity