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?

Quickbooks Online Accounting
3rd Edition
ISBN:9780357391693
Author:Owen
Publisher:Owen
Chapter5: Operating Activities: Purchases And Cash Payments
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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?

Time on Network
Calls (thousands)
(hours)
337,500
1,012,500
Air express
553,000
237,000
Ground service
Transcribed Image Text:Time on Network Calls (thousands) (hours) 337,500 1,012,500 Air express 553,000 237,000 Ground service
Division
Network Cost
Air express
Ground service
Transcribed Image Text:Division Network Cost Air express Ground service
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