Use the information below to answer the following question(s).Bill Cobb Corporation had the following activities, pooled costs, and physical flow of driver units.The company uses activity-based costing. The above activities are used by departments X and Y as follows:

-How much of the account verification cost will be assigned to Department Y?
A)$15,000
B)$7,500
C)$100,000
D)$10,000
E)$50,000

Question

Use the information below to answer the following question(s).Bill Cobb Corporation had the following activities, pooled costs, and physical flow of driver units.The company uses activity-based costing.  The above activities are used by departments X and Y as follows:
 
-How much of the account verification cost will be assigned to Department Y?
A)$15,000 
B)$7,500 
C)$100,000 
D)$10,000 
E)$50,000

Quizplus · Accepted Answer

To determine how much of the account verification cost will be assigned to Department Y, we need to use the activity-based costing formula: 
Total Cost = Activity Rate x Driver Units

First, calculate the activity rate for account verification: 
Activity Rate = Total Cost of Account Verification / Total Driver Units of Account Verification 
Activity Rate = $30,000 / 4,000 = $7.50 per unit

Next, calculate the total driver units used by Department Y for account verification: 
Total Driver Units = Driver Units per Product x Total Units Produced by Department Y 
Total Driver Units = 1,000 x 5,000 = 5,000 units

Finally, use the formula to calculate the total cost of account verification assigned to Department Y: 
Total Cost = Activity Rate x Driver Units 
Total Cost = $7.50 x 5,000 
Total Cost = $37,500

Therefore, the answer is B) $7,500.

Use the Information Below to Answer the Following Question(s)