Fenway Telcom has three divisions, commercial, retail, and consumer, that share

Question

Fenway Telcom has three divisions, commercial, retail, and consumer, that share the common costs of the company's computer server network. The annual common costs are $2,610,000. You have been provided with the following information for the upcoming year:

Fenway Telcom uses the single rate method and allocates common costs based on the number of connections. What is the total computer server network cost allocated to the Commercial Division?

A. $1,305,000

B. $587,250

C. $522,000

D. $652,500

Fenway Telcom has three divisions, commercial, retail, and consumer, that share the common costs of the company's computer server network. The annual common costs are $2,610,000. You have been provided with the following information for the upcoming year:

Explanation / Answer

Common cost based on number of connections= (Commercial number of connections/Total connections)*Common Cost

=(43500/174000)*2610000

= 652500$

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