How much of the headquarters cost allocation should Nashville expect to receive next year?
How much of the headquarters cost allocation should Nashville expect to receive next year?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Founder Consulting Corporation has its headquarters in Memphis and operates from three branch offices in Nashville, Atlanta, and Louisville. Two of the company's activity cost pools are Administrative Service and Development Service. These costs are allocated to the three branch offices using an activity-based costing system. Information for next year follows:
| Activity Cost Pool | Activity Measure | Estimated Cost | |||
| Administrative service | % of time devoted to branch | $ | 1,680,000 | ||
| Development service | Computer time | $ | 630,000 | ||
Estimated branch data for next year is as follows:
| Time to branch | Computer time | ||||||||
| Nashville | 70 | % | 1,600,000 | minutes | |||||
| Atlanta | 20 | % | 1,200,000 | minutes | |||||
| Louisville | 10 | % | 400,000 | minutes | |||||
| Total | 100 | % | 3,200,000 | minutes | |||||
How much of the headquarters cost allocation should Nashville expect to receive next year?
Transcribed Image Text:Founder Consulting Corporation has its headquarters in Memphis and operates from three branch offices in Nashville, Atlanta, and Louisville. Two of the company's
activity cost pools are Administrative Service and Development Service. These costs are allocated to the three branch offices using an activity-based costing
system. Information for next year follows:
Activity Cost Pool
Administrative service
Activity Measure
Estimated Cost
% of time devoted to branch
$1,680,000
Development service
Computer time
$ 630,000
Estimated branch data for next year is as follows:
Time to
Computer time
branch
Nashville
70%
1,600,000 minutes
Atlanta
20%
1,200,000 minutes
Louisville
10%
400,000 minutes
Total
100%
3,200,000 minutes
How much of the headquarters cost allocation should Nashville expect to receive next year?
Transcribed Image Text:Multiple Choice
$1,806,000
$1,662,000
$651,000
$1,491,000
$1,412,250
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