Alternative Allocation Bases—Service: WKRP Enterprises has a TV and a radio station that share the common costs of the company's AP wire service, which is $48,500 a year. You have the following information about the AP wire and the two stations:

Required:

a. What is the AP wire service cost charged to each station if wire service-hours is used as an allocation basis?

b. What is the AP wire service cost charged to each station using hours of news broadcast as a basis for allocation?

c. Which method allocates more costs to TV? Which method allocates more costs to Radio?

Transcribed Image Text:

Wire Service- Hours Used Station This Period TV 460 Radio 316 Hours of News Broadcasts 120 480