Trustme Vehical Rental Corporation has two departments, Car Rental and Truck Ren

Question

Trustme Vehical Rental Corporation has two departments, Car Rental and Truck Rental. Central costs may be allocated to the two departments in various ways.



Car Rental Truck Rental

Number of vehicles in fleet 700 300

Number of employees 150 50

Sales $1,500,000 $750,000





a. If administrative expense of $125,000 is allocated on the basis of number of employees, the amount allocated to the truck rental department would be

b. If administrative expense of $125,000 is allocated on the basis of number of employees, the amount allocated to the car rental department would be

c. If advertising expense of $150,000 is allocated on the basis of sales, the amount allocated to the car rental department would be

d. If advertising expense of $225,000 is allocated on the basis of sales, the amount allocated to the truck rental department would be

e. If the facility lease expense of $350,000 is allocated on the basis of vehicles in the fleet, the amount allocated to the truck rental department would be

please show formulas with answers

Explanation / Answer

(a) 125000 x 50/(150 + 50) = $31250 (b) 125000 x 150/(150 + 50) = $93750 (c) 150000 x 150/(150+75) = $100000 (d) 225000 x 75 / (150 + 75) = $75000 (e) 350000 x 300/(700 + 300) = $105000 Hope this helps!

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