Bartolo Delivery has two divisions, air express and ground service, that share the common costs of the company’s communications network, which are $8,300,000 a year. You have the following information about the two divisions and the common communications network. Calls (thousands) Time on Network (hours) Air express 511,000 347,500 Ground service 219,000 1,042,500 Required: What is the communications network cost that is charged to each division if the number of calls is used as the allocation basis? What is the communications network cost to each division using time on network as the allocation basis?
Bartolo Delivery has two divisions, air express and ground service, that share the common costs of the company’s communications network, which are $8,300,000 a year. You have the following information about the two divisions and the common communications network. Calls (thousands) Time on Network (hours) Air express 511,000 347,500 Ground service 219,000 1,042,500 Required: What is the communications network cost that is charged to each division if the number of calls is used as the allocation basis? What is the communications network cost to each division using time on network as the allocation basis?
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter10: Evaluating Decentralized Operations
Section: Chapter Questions
Problem 17E: Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside...
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Question
Bartolo Delivery has two divisions, air express and ground service, that share the common costs of the company’s communications network, which are $8,300,000 a year. You have the following information about the two divisions and the common communications network.
|
|
Calls (thousands) |
Time on Network (hours) |
||||
|
Air express |
|
511,000 |
|
|
347,500 |
|
|
Ground service |
|
219,000 |
|
|
1,042,500 |
|
Required:
- What is the communications network cost that is charged to each division if the number of calls is used as the allocation basis?
- What is the communications network cost to each division using time on network as the allocation basis?
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