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 $5,472,000. You have been provided with the following information for the upcoming year:

  

  

The cost accountant determined $3,939,840 of the server network's costs were fixed and should be allocated based on the number of connections. The remaining costs should be allocated based on the time on the network. What is the total server network costs allocated to the Commercial Division, assuming the company uses dual-rates to allocate common costs?

   Connections Time on
Network (hours)   Commercial 57,000 45,600   Retail 76,000 57,000   Consumer   95,000 125,400

Explanation / Answer

Server network costs allocated to Commercial Division:

Fixed network costs = $ 3,939,840 x 57,000 / 228,000 = $ 984,960

Other network costs = $ 1,532,160 x 45600 / 228,000 = $ 306,432

Therefore, server network costs allocated to the Commercial Division is $ 984,960 + $ 306,432 = $ 1,291,392

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

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