Answer the following questions using the information below:
The Sparky Electrical Products Company has an Electric Mixer Division and an Electric Lamp Division.Of a $30 000 000 bond issue,the Electric Mixer Division used $21 000 000 and the Electric Lamp Division used $9 000 000 for expansion.Interest costs on the bond totalled $1 500 000 for the year.
-What amount of interest costs should be allocated to the Electric Lamp Division?
A)$450 000
B)$4 300 000
C)$9 000 000
D)$1 050 000

Question

Quizplus · Accepted Answer

The Electric Lamp Division used 30% of the total bond issue ($9,000,000 ÷ $30,000,000), so it should be allocated 30% of the interest costs ($1,500,000 x 0.3) which equals $450,000.

Answer the Following Questions Using the Information Below