2.00 points Exercise 12-34 Single versus Dual Rates (LO 12-6) Bartolo Delivery h

ID: 2599471 • Letter: 2

Question

2.00 points Exercise 12-34 Single versus Dual Rates (LO 12-6) Bartolo Delivery has two divisions, air express and ground service, that share the common costs of the company's communications network, which are $8,000,000 a year You have the following information about the two divisions and the common communications network Time on Network Calls (thousands) 588,000 252,000 hours) 357.500 1,072,500 Required e the cost allocation if $5 60 million of the comm network costs are fixed and allocated on the basis of time on network, and the the basis of the number of calls. (Do not round intermediate calculations. Enter your answers in thousands or dollars.) Air Express Ground Servi 146,794 $ 10,309 157.103 441,000 24.055 465 055 Total eBook & Resources 815 PM Type here to search

Explanation / Answer

Total Common Cost = 8000000

Fixed communication networks cost = 5600000

Variable communication networks cost = 8000000 – 5600000 = 2400000

Air Express

Ground Service

Fixed

5600000*[357500/(357500+1072500)] = 5600000*[357500/1430000] = 5600000*0.25 = 1400000

5600000*[1072500/(357500+1072500)] = 5600000*[1072500/1430000] = 5600000*0.75 = 4200000

Variable

2400000*[588000/(588000+252000)] = 2400000*[588000/840000] = 2400000*0.70 = 1680000

2400000*[252000/(588000+252000)] = 2400000*[252000/840000] = 2400000*0.30 = 720000

Total

1400000 + 1680000 = 3080000

4200000 + 720000 = 4920000