Tenet Engineering, Incorporated operates two user divisions as separate cost objects. To determine the costs of each division, the company allocates common costs to the divisions. During the past month, the following common costs were incurred: Computer services (85% fixed) Building occupancy Personnel costs Total common costs The following information is available concerning various activity measures and service usages by each of the divisions: Division A 25, 200 $ 453,000 Area occupied (square feet) Payroll Computer time (hours) $ 268,000 658,000 108,000 $ 1,034,000 Computer storage (megabytes) Equipment value Operating profit (pre-allocations) 320 5,400 $ 296,000 $ 735,000 Division B 50,400 $ 253,000 340 0 $ 346,000 $ 675,000 If common computer service costs are allocated using computer time as the allocation basis, what is the computer cost allocated to Division B? Note: Do not round intermediate calculations.

Tenet Engineering, Incorporated operates two user divisions as separate cost objects. To determine the costs of each division, the company allocates common costs to the divisions. During the past month, the following common costs were incurred: Computer services (85% fixed) Building occupancy Personnel costs Total common costs The following information is available concerning various activity measures and service usages by each of the divisions: Division A 25, 200 $ 453,000 Area occupied (square feet) Payroll Computer time (hours) $ 268,000 658,000 108,000 $ 1,034,000 Computer storage (megabytes) Equipment value Operating profit (pre-allocations) 320 5,400 $ 296,000 $ 735,000 Division B 50,400 $ 253,000 340 0 $ 346,000 $ 675,000 If common computer service costs are allocated using computer time as the allocation basis, what is the computer cost allocated to Division B? Note: Do not round intermediate calculations.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter5: Support Department And Joint Cost Allocation

Section: Chapter Questions

Problem 1CMA

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Tenet Engineering, Inc. operates two user divisions as separate cost objects. To determine the costs of each division, the company allocates common costs to the divisions. During the past month, the following common costs were incurred: Computer services (85% fixed) Building occupancy 347,000 674,000 Personnel costs 174,000 Total common costs $1,195,000 The following information is available concerning various activity measures and service usages by each of the divisions: Division A Division B Area occupied (square feet) 26,900 53,800 Рayroll $436,000 $236,000 Computer time (hours) Computer storage (megabytes) 280 300 4,400 -0- Equipment value Operating profit (pre-allocations) $205,000 $255,000 $767,500 $707,500 If common computer service costs are allocated using computer time as the allocation basis, what is the computer cost allocated to Division B (rounded to the nearest whole dollar)? Multiple Choice $216,625. $187,736. $180,939. $179,483.
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