Answer the following questions using the information below:
Trustme Vehicle Rental Corporation has two departments,Car Rental and Truck Rental.Central costs may be allocated to the two departments in various ways.
$$\begin{array} { l r r }
& \text { Car Rental } & \text { Truck Rental } \
\text { Number of vehicles in fleet } & 700 & 300 \
\text { Number of employees } & 150 & 50 \
\text { Sales } & \$ 1500000 & \$ 750000
\end{array}$$
-If the administrative expense of $125 000 is allocated on the basis of number of employees,the amount allocated to the Car Rental Department would be:
A)$31 250
B)$125 000
C)$93 750
D)$75 000

Question

Answer the following questions using the information below:
Trustme Vehicle Rental Corporation has two departments,Car Rental and Truck Rental.Central costs may be allocated to the two departments in various ways.
 $$\begin{array} { l r r } 
& \text { Car Rental } & \text { Truck Rental } \
\text { Number of vehicles in fleet } & 700 & 300 \
\text { Number of employees } & 150 & 50 \
\text { Sales } & \$ 1500000 & \$ 750000
\end{array}$$
-If the administrative expense of $125 000 is allocated on the basis of number of employees,the amount allocated to the Car Rental Department would be:
A)$31 250
B)$125 000
C)$93 750
D)$75 000

Quizplus · Accepted Answer

The total number of employees in both departments is 25 (15 in Car Rental and 10 in Truck Rental). To allocate the administrative expense on the basis of number of employees, we need to determine the ratio of employees in Car Rental to the total employees. This is calculated as: 15/25 = 0.6. 
Therefore, the amount allocated to Car Rental is:
0.6 x $125 000 = $75 000. 
This is the amount that would be allocated to Car Rental if the administrative expense is allocated on the basis of number of employees. Hence, the best choice is C.

Answer the Following Questions Using the Information Below: Trustme Vehicle

Answer the Following Questions Using the Information Below:
Trustme Vehicle