Question7 10 points Answer the following question with the data contained in Tab

Question

Question7 10 points Answer the following question with the data contained in Table 1 below. Table 1. Profit Centes Analysis Retrofit 10,000,000 Cost of Construction 600 4,000,000 200,000 2,620,000 200,000 Tetal Direct Cost 9,000,000 350,000 500 Operating Expenses Auto and Truck 60,000 237,000 00,000 ance (Work-in Interest Work Other Varable Expense Contributions Tetal Variable 5,000 3,000 20,000 ation (Auto and Depreciation e (Auto and T and Truck) 44,000 etal Fixed Operating 453,000 Tetal Operating Expense Net Profit With the allocation base of total direct cost what amount of Interest (Work-in-Progress) should be allocated to the profit center of Remodel? O 22,222 O 73.888 O 11,111 38,888

Explanation / Answer

Interest(work in Progress) cost = $100000 Total direct cost = $9000000 Direct cost Remodel = $2000000 Interest(work in Progress) to be allocated to profit center of Remodel = 100000/9000000*2000000= $22222 Option 1 is correct

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