Boxes-2-Go has two divisions, large and small, that share the common costs of th

Question

Boxes-2-Go has two divisions, large and small, that share the common costs of the company's communications network. The annual common costs are $1,540,000. You have been provided with the following information for the upcoming year:

The cost accountant determined $924,000 of the communication network's costs were fixed and should be allocated based on the number of calls. The remaining costs should be allocated based on the time on the network. What is total communication network costs allocated to the Small Box Division, assuming the company uses dual-rates to allocate common costs?

Boxes-2-Go has two divisions, large and small, that share the common costs of the company's communications network. The annual common costs are $1,540,000. You have been provided with the following information for the upcoming year:

Explanation / Answer

Total Cost 1540000 Less: Fixed Cost -924000 Balance Cost 616000 Total Calls = 60000+50000 = 110000 Total Hours = 80000+200000= 280000 Small Division Fixed Cost 924000*60000/110000 504000 Other Cost 616000*80000/280000 176000 Total Communication network cost for small division 680000

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