Galley Company, a manufacturer of small kitchen appliances, had the following activities, allocated costs, and allocation bases:ActivitiesAllocated CostsAllocation BaseAccount inquiry (hours)$73,0002600 hoursAccount billing (lines)$39,00016,000 linesAccount verification (accounts)$12,00030,000 accountsCorrespondence (letters)$10,0001600 lettersThe above activities are carried out at two of its regional offices.ActivitiesNortheast OfficeMidwest OfficeAccount inquiry (hours)160 hours300 hoursAccount billing (lines)14,000 lines7000 linesAccount verification (accounts)1400 accounts600 accountsCorrespondence (letters)60 letters130 lettersWhat is the cost per line for the account billing activity? (Round your answer to the nearest cent.)Group of answer choices$2.44$28.08$15.00$4.56

Cost per line is calculated by dividing the allocated cost by the allocation base.

Answered: Galley Company, a manufacturer of small…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 19E

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Galley Company, a manufacturer of small kitchen appliances, had the following activities, allocated costs, and allocation bases:

Activities	Allocated Costs	Allocation Base
Account inquiry (hours)	$73,000	2600 hours
Account billing (lines)	$39,000	16,000 lines
Account verification (accounts)	$12,000	30,000 accounts
Correspondence (letters)	$10,000	1600 letters

The above activities are carried out at two of its regional offices.

Activities	Northeast Office	Midwest Office
Account inquiry (hours)	160 hours	300 hours
Account billing (lines)	14,000 lines	7000 lines
Account verification (accounts)	1400 accounts	600 accounts
Correspondence (letters)	60 letters	130 letters

What is the cost per line for the account billing activity? (Round your answer to the nearest cent.)

Group of answer choices

$2.44

$28.08

$15.00

$4.56

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