PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 7-2

Essay

PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 7-2
NAT: BUSPROG: Analytic
STA: AICPA: FN-Measurement | IMA: Cost Management | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Application
NOT: 5 min.
-Assume that the accounts payable department of a company has 10 clerks; each one is paid $25,000 per year ($250,000 total clerical salaries). Six of the clerks spend the following percentages of time on the three activities:
20% of their time on processing payments30% of their time matching invoices, receiving documents, and billing statement
50% of their time correcting errors in the various documents
One clerk, the head clerk, spends 50% of her time on administrative duties, and the remainder on error correction. The remaining three clerks spend 30% of their time on processing payments and the remaining 70% of their time on matching documents.
Long distance telephone costs of $1,700 are directly traced to the activity "correcting errors."