Energy Manufacturing Inc. provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry $320,000 16,000 hours Account billing $200,000 4,000,000 lines Account verification accounts $173,250 70,000 accounts Correspondence letters $24,000 4,000 letters Total costs $717,250 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 4,200 hours 2,700 hours Account billing lines 900,000 lines 750,000 lines Account verification accounts 8,000 accounts 6,000 accounts Correspondence letters 1,400 letters 1,800 letters How much of the account inquiry cost will be assigned to Department A

$84,000

Explanation:

Cost per hour for Account inquiry = Account inquiry cost / Activity cost - drivers

=  320,000 / 16,000 hours

= $20 per hour

Department A has 4,200 hours of account inquiry. Cost will be:

= 4,200 * 20

= $84,000

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