The cost accountant determined $2,700,000 of the communication network's costs were fixed and should be allocated based on the number of calls.The remaining costs should be allocated based on the time on the network.What is total communication network costs allocated to the Small Box Division assuming the company uses dual-rates to allocate common costs?
A)$2,520,000
B)$1,800,000
C)$1,320,000
D)$1,200,000

Question

Quizplus · Accepted Answer

The total communication network costs allocated to the Small Box Division is $2,520,000. This is because the fixed costs are allocated based on the number of calls, and the remaining costs are allocated based on the time on the network. The Small Box Division has 60% of the calls and 40% of the time on the network. Therefore, the Small Box Division is allocated 60% of the fixed costs and 40% of the remaining costs.

The Cost Accountant Determined $2,700,000 of the Communication Network's Costs