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 $8,400,000 a year. You have the following information about the two divisions and the common communications network: Time on Network Air express Ground service Calls (thousands) 504,000 216,000 hous 352,500 1,057,500 Required Determine the cost allocation if $5.04 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.) Air Express Ground Service Fixed Variable Total

Explanation / Answer

Total cost

$8,400,000

Fixed cost

$5,040,000

Variable cost (Balance)

$3,360,000

Allocation of fixed cost based on time on network

Time on netwrok

% of time on network

Allocation

Calculation

Air express

$352,500

25%

1,260,000

(5,040,000*25%)

Ground service

$1,057,500

75%

3,780,000

(3,360,000*75%)

$1,410,000

Allocation of Variable cost based on calls

Calls (thousands)

% of time on calls

Allocation

Calculation

Air express

$504,000

70%

2,352,000

(3,360,000*70%)

Ground service

$216,000

30%

1,008,000

(3,360,000*30%)

$720,000

Air express

Ground service

Fixed (In thousands)

                    1,260

                              3,780

variable (In thousands)

                    2,352

                              1,008

Total

                    3,612

                              4,788

Total cost

$8,400,000

Fixed cost

$5,040,000

Variable cost (Balance)

$3,360,000

Allocation of fixed cost based on time on network

Time on netwrok

% of time on network

Allocation

Calculation

Air express

$352,500

25%

1,260,000

(5,040,000*25%)

Ground service

$1,057,500

75%

3,780,000

(3,360,000*75%)

$1,410,000

Allocation of Variable cost based on calls

Calls (thousands)

% of time on calls

Allocation

Calculation

Air express

$504,000

70%

2,352,000

(3,360,000*70%)

Ground service

$216,000

30%

1,008,000

(3,360,000*30%)

$720,000

Air express

Ground service

Fixed (In thousands)

                    1,260

                              3,780

variable (In thousands)

                    2,352

                              1,008

Total

                    3,612

                              4,788

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

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