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Tenet Engineering, Inc. operates two user divisions as separate cost objects. To determine the costs of each division, the company allocates common costs to the
Tenet Engineering, Inc. operates two user divisions as separate cost objects. To determine the costs of each division, the company allocates common costs to the divisions. During the past month, the following common costs were incurred: Computer services (85% fixed) Building occupancy Personnel costs Total common costs $ 329,000 692,000 124,000 $1,145,000 The following information is available concerning various activity measures and service usages by each of the divisions: Division A Division B Area occupied (square feet) 25,700 51,400 Payroll $400,000 $200,000 Computer time (hours) 400 420 Computer storage (megabytes) 8,650 -0- Equipment value $239,000 $289,000 Operating profit (pre- $627,500 $567,500 allocations) If common computer service costs are allocated using computer time as the allocation basis, what is the computer cost allocated to Division B (rounded to the nearest whole dollar)? Multiple Choice $168,512. $169,968. $176,765. $205,654
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