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A.G. Mills Inc. operates two production divisions as separate cost objects. To determine the costs of each division, the company allocates common costs to the
A.G. Mills Inc. operates two production divisions as separate cost objects. To determine the costs of each division, the company allocates common costs to the divisions. During February, the following common costs were incurred: Data processing services (85% fixed) $260,000 Building rent $600,000 Payroll $110,000 Total Common Costs $970,000 The following information is available concerning various activity measures and service usages by each of the divisions: Division 1 Division 2 Area occupied (sq. feet) 40,000 20,000 Payroll $180,000 $380,000 Equipment value $250,000 $200,000 Computer time (hours) 220 200 Computer storage (megabytes) 0 4,050 Operating profit (pre-allocations) $495,000 $555,000 Using the most appropriate allocation basis, what are the total common costs allocated to Division 2? $321,333 $396,178 $398,453 AC
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