Stark Corporation has two departments,Car Rental and Truck Rental.Central costs may be allocated to the two departments in various ways.

If administrative expense of $77,500 is allocated on the basis of number of employees,the amount allocated to the Car Rental Department would be ________.
A)$38,750.00
B)$52,364.86
C)$25,135.14
D)$51,278.20

Question

Stark Corporation has two departments,Car Rental and Truck Rental.Central costs may be allocated to the two departments in various ways.

If administrative expense of $77,500 is allocated on the basis of number of employees,the amount allocated to the Car Rental Department would be ________.
A)$38,750.00 
B)$52,364.86 
C)$25,135.14 
D)$51,278.20

Quizplus · Accepted Answer

The amount allocated to the Car Rental Department
= $77,500 × [125 ÷ (125 + 60)] =$52,364.86

Stark Corporation Has Two Departments,Car Rental and Truck Rental