Cincinnati Million, Inc. operates two user divisions as separate cost objects. T

Question

Cincinnati Million, 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:

   

   

The following information is available concerning various activity measures and service usages by each of the divisions:

  

   

If common computer service costs are allocated using computer time as the allocation basis, what is the computer cost allocated to Division B?

  Computer services (85% fixed) $276,000   Building occupancy 616,000   Personnel costs 126,000   Total common costs $1,018,000

Explanation / Answer

Total computer time used in two divisions = 360 + 380 = 740 hours

Total common computer service cost = $276000

Allocation rate of common computer service costs = $276000 / 740 hours = $372.97 / hour

Computer cost allocated to Division B = 380 hours x $372.97/hour = $141729

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.