ABC Corporation has three service departments with the following costs and activ
ID: 2493682 • Letter: A
Question
ABC Corporation has three service departments with the following costs and activity base: Service Department Cost Activity Base for Allocation Graphics Production $200,000 # of copies Accounting $500,000 # of invoices processed Personnel Department $400,000 # of employees ABC has three operating divisions. Micro. Macro and Super. Their revenue, cost and activity information are as follows: Micro Macro Super Direct Revenues $700,000 $850,000 $650,000 Direct Operating Expenses t 50,000 $ 70,000 $100,000 # of copies made 20,000 30,000 50.000 # invoices processed 700 800 500 # of employee 130 145 125 What will the income of the Super Division be after all service department allocations $550,000 $325,000 $300,000 $200,000Explanation / Answer
correct option is "D"
Total activity cost per activty Graphics 20000+30000+50000= 100,000 200,000/100,000 =2 per copies Accounting 700+800+500 = 2000 500,000/2000 = 250 per invoices Personnel 130+ 145+125 = 400 400,000 /400 = 1000 per employees