Webster Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry hours $250,000 10,000 hours Account billing lines $125,000 5,000,000 lines Account verification accounts $50,000 50,000 accounts Correspondence letters $ 25,000 5,000 letters Total costs $450,000 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 1,000 hours 3,000 hours Account billing lines 200,000 lines 300,000 lines Account verification accounts 10,000 accounts 8,000 accounts Correspondence letters 1,000 letters 1,500 letters How much of account verification costs will be assigned to Department A? Group of answer choices $25,000 $10,000 $50,000 $40,000
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Webster Company provides the following ABC costing information:
| Activities | Total Costs | Activity-cost drivers |
| Account inquiry hours | $250,000 | 10,000 hours |
| Account billing lines | $125,000 | 5,000,000 lines |
|
Account verification accounts |
$50,000 | 50,000 accounts |
| Correspondence letters | $ 25,000 | 5,000 letters |
| Total costs | $450,000 |
The above activities are used by Departments A and B as follows:
| Department A | Department B | |
| Account inquiry hours | 1,000 hours | 3,000 hours |
| Account billing lines | 200,000 lines | 300,000 lines |
| Account verification accounts | 10,000 accounts | 8,000 accounts |
| Correspondence letters | 1,000 letters | 1,500 letters |
How much of account verification costs will be assigned to Department A?
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