Thompson Aeronautics repairs aircraft engines. The companys Purchasing department supports its two departments, Defense and Commercial. The Defense division has contracts with the Department of Defense and the Commercial division works primarily with domestic airlines and air freight companies. The cost of the Purchasing Department is $6 million annually. information on the activity of the Purchasing department for the last year follows Number of Dollar Amount Purchase Orders of Purchases 7,500 Commercial 42,500 165,000,000 Defense $135,000,000 orders? Required: 6. What is the cost charged to each division if Thompson allocates Purchasing department costs based on the number of purchase b. What is the cost charged to each division if Thompson allocates Purchasing department costs based on the dollar amount of the purchases? c. Contracts with the Defense department are on a cost-plus fixed fee basis, meaning the price is based on the cost of repairing an engine including any overhead assigned to the division Contracts with commercial airlines and air freight companies are almost all fixed price, meaning the price does not depend directly on the cost Will this affect Thompson's choice of an allocation base? Complete this question by entering your answers in the tabs below. Required Required Required purchases? C. Contracts with the Defense department are on a cost-plus fixed fee basis, meaning the price is based on the cost of repairing an engine, including any overhead assigned to the division Contracts with commercial airlines and air freight companies are almost all fixed price, meaning the price does not depend directly on the cost. Will this affect Thompson's choice of an allocation base? Complete this question by entering your answers in the tabs below. Required a Required B Required What is the cost charged th each division if Thompson allocates Purchasing department costs based on the number of purchase orders? (Enter your answers in dollars, not in millions. Do not round Intermediate calculations.) Cost Allocation Defense Commercial Reguda Required B > purchases? c. Contracts with the Defense department are on a cost-plus fixed fee basis, meaning the price is based on the cost of repairing an engine, including any overhead assigned to the division Contracts with commercial airlines and air freight companies are almost al fixed price, meaning the price does not depend directly on the cost. Will this affect Thompson's choice of an allocation base? Complete this question by entering your answers in the tabs below. Required A Required B Required What is the cost charged to each division If Thompson allocates Purchasing department costs based on the dollar amount of the purchases? (Enter your answers in dollars, not in millions. Do not round intermediate calculations.) Cost Allocation Defense Commercial
