Bartolo Delivery has two divisions, air express and ground service, that share the common costs of the company’s communications network, which are $8,300,000 a year. You have the following information about the two divisions and the common communications network. Calls (thousands)Time on Network (hours)Air express 511,000 347,500 Ground service 219,000 1,042,500 Required:What is the communications network cost that is charged to each division if the number of calls is used as the allocation basis?What is the communications network cost to each division using time on network as the allocation basis?

Answered: Bartolo Delivery has two divisions, air…

Allocation basis is a method which is use to determine the cost accounting allocated to overhead…

Calls (thousands)

Time on Network (hours)

Air express

Ground service

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

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 $8,300,000 a year. You have the following information about the two divisions and the common communications network.

Required:

What is the communications network cost that is charged to each division if the number of calls is used as the allocation basis?
What is the communications network cost to each division using time on network as the allocation basis?

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