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 $7.00 million annually.

Thompson Aeronautics repairs aircraft engines. The company's 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 $7.00 million annually. Information on the activity of the Purchasing Department for the last year follows: Number of Purchase Orders nollar Amount of Purchases $156,000,000 234,000,000 Defense 8,200 32,800 Commercial Required: a. What is the cost charged to each division if Thompson allocates Purchasing Department costs based on the number of purchase orders? (Do not round intermediate calculations. Enter your answers in thousands of dollars.) Cost Allocation Defense Commercial b. What is the cost charged to each division if Thompson allocates Purchasing Department costs based on the dollar amount of the purchases? (Do not round intermediate calculations. Enter your answers in thousands of dollars.) Cost Allocation Defense Commercial Contracts with the Derense Department are on a cost-plus fixo c. xed Tee basis, meaning the price is Dased on the cost ol repang an engin, ncuag nyv division du aaalgdto" Thomp freight companies ommerci price, meaning the price does allocation base