Bartolo Delivery has two divisions, air express and ground service, that share the common costs of the company’s communications network, which are $8,500,000 a year. You have the following information about the two divisions and the common communications network. Calls (thousands) Time on Network (hours) Air express 553,000 337,500 Ground service 237,000 1,012,500 Required: a. What is the communications network cost that is charged to each division if the number of calls is used as the allocation basis? b. What is the communications network cost to each division using time on network as the allocation basis?
Bartolo Delivery has two divisions, air express and ground service, that share the common costs of the company’s communications network, which are $8,500,000 a year. You have the following information about the two divisions and the common communications network. Calls (thousands) Time on Network (hours) Air express 553,000 337,500 Ground service 237,000 1,012,500 Required: a. What is the communications network cost that is charged to each division if the number of calls is used as the allocation basis? b. What is the communications network cost to each division using time on network as the allocation basis?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Bartolo Delivery has two divisions, air express and ground service, that share the common costs of the company’s communications network, which are $8,500,000 a year. You have the following information about the two divisions and the common communications network.
| Calls (thousands) | Time on Network (hours) | |||||
| Air express | 553,000 | 337,500 | ||||
| Ground service | 237,000 | 1,012,500 | ||||
Required:
a. What is the communications network cost that is charged to each division if the number of calls is used as the allocation basis?
b. What is the communications network cost to each division using time on network as the allocation basis?
Transcribed Image Text:Time on Network
Calls (thousands)
(hours)
337,500
1,012,500
Air express
553,000
237,000
Ground service
Transcribed Image Text:Division
Network Cost
Air express
Ground service
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