Cameron Company has two major segments with the following information: The busin

Question

Cameron Company has two major segments with the following information:

The business also has overhead costs as follows:

Overhead does NOT include salesperson salaries.

a. Determine the income of each segment if overhead costs are allocated based on sales revenue.

b. Determine the income of each segment is the overhead costs are allocated using activity-based cost drivers.

East West Total Annual Revenue          400,000      1,200,000 1,600,000 Annual Salesperson Salaries          300,000         450,000      750,000 Number of Customers                    60                   90              150 Miles Driven          180,000         120,000      300,000

Explanation / Answer

Answer:-a)-

b)-

Explanation:-

Cameron Company Revenue statement(Overhead cost allocated on the basis on sales revenue) Particulars East West Total $ $ $ Revenue 400000 1200000 1600000 Less:-Overhead cost Overhead cost (400000/1600000)*649000=162250 (1200000/1600000)*649000=486750 649000 Net Income 237750 713250 951000

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