Packages-2-Go has two divisions, air express and ground service, that share the

Question

Packages-2-Go has two divisions, air express and ground service, that share the common costs of the company's communications network, which are $4,970,000 a year. You have the following information about the two divisions and the common communications network: Required: What is the communications network cost that is charged to each division if the number of calls is used as the allocation basis? (Do not round intermediate calculations. Round final answers to the nearest dollar amounts.) What is the communications network cost to each division using time on network as the allocation basis? (Do not round intermediate calculations. Round final answers to the nearest dollar amounts.)

Explanation / Answer

Calls Time on network (thousands) (hours) Air express 154000 123000 Ground service 105000 496000 Total 259000 619000 Common cost 4970000 communication network a) Allocation on number of calls Calls Cost allocated (thousands) Air express 154000 2955135.14 (154000/259000*4970000) Ground service 105000 2014864.86 (105000/259000*4970000) Total 259000 4970000 Common cost 4970000 communication network b) Time on network Cost allocated (hours) Air express 123000 987576.74 (123000/619000*4970000) Ground service 496000 3982423.26 (496000/619000*4970000) Total 619000 4970000 Common cost 4970000 communication network

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.