Bartolo Delivery has two divisions, air express and ground service, that share t

Question

Bartolo Delivery has two divisions, air express and ground service, that share the common costs of the company’s communications network, which are $8,100,000 a year. You have the following information about the two divisions and the common communications network:

Required:

Determine the cost allocation if $5.67 million of the communications network costs are fixed and allocated on the basis of time on network, and the remaining costs, which are variable, are allocated on the basis of the number of calls. (Do not round intermediate calculations. Enter your answers in thousands of dollars.)

Calls (thousands) Time on Network (hours) Air express 511,000 362,500 Ground service 219,000 1,087,500

Explanation / Answer

Air express ground srvice Fixed 1417.5 4252.5 Variable 1701 729 Total 3118.5 4981.5

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