Question - Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases:
Activities Indirect Activity Costs Allocation
Base Account inquiry (hours) $86,400 2,700
Account billing (lines) $56,000 32,000
Account verification (accounts) $38,250 25,500
Correspondence (letters) $80,000 10,000
Potter & Weasley uses activity based costing.
The above activities are used by Departments P and Q as follows:
Department P Department Q
Account inquiry (hours) 400 800
Account billing (lines) 10,000 4,000
Account verification (accounts) 6,000 7,000
Correspondence (letters) 1,000 2,000
How much of the correspondence cost will be assigned to Department P?
A. $16,000
B. $1,500
C. $8,000
D. $9,000