The Local USPS Office Sorts Letters by Zip Code

Essay

The local USPS office sorts letters by zip code. During the month of March, 200,000 letters were sorted. The cost of sorting includes the following:

a. Explain why process costing is appropriate for this operation.
b. Calculate the cost per letter for this operation.
c. There are no direct materials used for the sorting operation. Is the absence of direct materials typical of services? If not, provide examples of services that use direct materials.