Problem - Merlin Company provides the following ABC costing information:

Activities Total Costs Activity-cost drivers

Account inquiry hours $200,000 10,000 hours

Account billing lines $140,000 4,000,000 lines

Account verification accounts $75,000 40,000 accounts

Correspondence letters $ 25,000 4,000 letters

Total costs $440,000

The above activities are used by Departments A and B as follows:

Department A Department B

Account inquiry hours 2,000 hours 4,000 hours

Account billing lines 400,000 lines 200,000 lines

Account verification accounts 10,000 accounts 8,000 accounts

Correspondence letters 1,000 letters 1,600 letters

Required:

a. How much of correspondence costs will be assigned to Department B?

b. How much of the total costs will be assigned to Department A?