ABC Corporation has three service departments with the following costs and activ

Question

ABC Corporation has three service departments with the following costs and activity base: Activity Base for Allocabion Cost 200,000 humber of copies 500,000 400,000 e Department Graphics Production of inveices of employees ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information are as follows: Micro Macro Super $700,000 s850,00 t650,000 7000 Direct revenues Direct operating expenses 100,000 umber of copies made 20, of invoices processed of employees What will the income of the Macro Division be after all service department allocations? Oa. $375,000 b. $575,000 $780,000 Od. $435,000 PreviousNext

Explanation / Answer

The correct answer is a. $ 375,000

Note :

Service Department Cost Activity Base ( Micro + Macro +Super) Activiy Rate ( Cost / Activity Base) Graphics 200,000 100,000 Copies 2 Accounting 500,000 2,000 Invoices Processed 250 Personnel 400,000 400 Number of Employees 1000

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