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Tenet Engineering, Inc. operates two user divisions as separate cost objects. To determine the costs of each division, the company allocates common costs to the divisions. During the past month, the following common costs were incurred: Computer services (85% fixed) $ 260,000 Building occupancy 600,000 Personnel costs 110,000 Total common costs $ 970,000 The following information is available concerning various activity measures and service usages by each of the divisions: Division A Division B Area occupied (square feet) 20,000 40,000 Payroll $380,000 $180,000 Computer time (hours) 200 220 Computer storage (megabytes) 4,050 -0- Equipment value $200,000 $250,000 Operating profit (pre-allocations) $555,000 $495,000 If common computer service costs are allocated using computer time as the allocation basis, what is the computer cost allocated to Division B (rounded to the nearest whole dollar)?

Tenet Engineering, Inc. operates two user divisions as separate cost objects. To determine the costs of each division, the company allocates common costs to the divisions. During the past month, the following common costs were incurred: Computer services (85% fixed) $ 260,000 Building occupancy 600,000 Personnel costs 110,000 Total common costs $ 970,000 The following information is available concerning various activity measures and service usages by each of the divisions: Division A Division B Area occupied (square feet) 20,000 40,000 Payroll $380,000 $180,000 Computer time (hours) 200 220 Computer storage (megabytes) 4,050 -0- Equipment value $200,000 $250,000 Operating profit (pre-allocations) $555,000 $495,000 If common computer service costs are allocated using computer time as the allocation basis, what is the computer cost allocated to Division B (rounded to the nearest whole dollar)?

Managerial Accounting
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 6E: Varney Corporation, a manufacturer of electronics and communications systems, allocates Computing...
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Tenet Engineering, Inc. operates two user divisions as separate cost objects. To determine the costs of each division, the company allocates common costs to the divisions. During the past month, the following common costs were incurred:

  • a) 
     
     $137,647.
  • b) 
     
     $173,333.
  • c) 
     
     $144,444.
  • d) 
     
     $136,190.
Tenet Engineering, Inc. operates two user divisions as separate cost objects. To determine the costs of each division, the company allocates common costs to the divisions. During the past month, the following common costs were incurred: Computer services (85% fixed) $ 260,000 Building occupancy 600,000 Personnel costs 110,000 Total common costs $ 970,000 The following information is available concerning various activity measures and service usages by each of the divisions: Division A Division B Area occupied (square feet) 20,000 40,000 Payroll $380,000 $180,000 Computer time (hours) Computer storage (megabytes) 200 220 4,050 -0- Equipment value Operating profit (pre-allocations) $200,000 $250,000 $555,000 $495,000 If common computer service costs are allocated using computer time as the allocation basis, what is the computer cost allocated to Division B (rounded to the nearest whole dollar)?
Transcribed Image Text:Tenet Engineering, Inc. operates two user divisions as separate cost objects. To determine the costs of each division, the company allocates common costs to the divisions. During the past month, the following common costs were incurred: Computer services (85% fixed) $ 260,000 Building occupancy 600,000 Personnel costs 110,000 Total common costs $ 970,000 The following information is available concerning various activity measures and service usages by each of the divisions: Division A Division B Area occupied (square feet) 20,000 40,000 Payroll $380,000 $180,000 Computer time (hours) Computer storage (megabytes) 200 220 4,050 -0- Equipment value Operating profit (pre-allocations) $200,000 $250,000 $555,000 $495,000 If common computer service costs are allocated using computer time as the allocation basis, what is the computer cost allocated to Division B (rounded to the nearest whole dollar)?
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