PROBLEM (8 POINTS)

The Hassan Corporation has an Electric Mixer Division and an Electric Lamp Division. Of a

$20,000,000 bond issuance, the Electric Mixer Division used $14,000,000 and the Electric Lamp

Division used $6,000,000 for expansion. The Electric Mixer Division has $10,000,000 of

revenue, the Electric Lamp Division has $6,000,000 of revenues Interest costs on the bond

totaled $1,500,000 for the year.

What amount of interest costs should be allocated to the Electric Mixer Division based on their

usage of the bond proceeds for expansion?

What amount of interest costs should be allocated to the Electric Lamp Division based on their

usage of the bond proceeds for expansion?

What amount of interest costs should be allocated to the Electric Mixer Division based on their

revenues?

What amount of interest costs should be allocated to the Electric Lamp Division based on

their revenues?