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 $3,045,000. You have been provided with the following information for the upcoming year:

What is the allocation rate for the upcoming year, assuming Boxes-2-Go uses the single-rate method and allocates common costs based on the number of calls?

A. $15.82

B. $11.71

C. $21.00

D. $9.09

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 $3,045,000. You have been provided with the following information for the upcoming year:

Explanation / Answer

Total calls = 77,500+67,500 = 145,000

Allocation rate:

= Total cost/Activity number

= $3,045,000/145,000

= $21 per call

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