Founder Consulting Corporation Has Its Headquarters in Memphis and Operates

question 50

Multiple Choice

Founder Consulting Corporation has its headquarters in Memphis and operates from three branch offices in Nashville,Atlanta,and Louisville.Two of the company's activity cost pools are Administrative Service and Development Service.These costs are allocated to the three branch offices using an activity-based costing system.Information for next year follows: Estimated branch data for next year is as follows: How much of the headquarters cost allocation should Nashville expect to receive next year?

• A)$280,000
• B)$409,500
• C)$472,500
• D)$504,000
• E)$560,000

---

Definitions:

Break-Even Point

The financial state where a company's total revenues equal its total costs, resulting in neither profit nor loss.

Variable Costs

Costs that fluctuate in direct proportion to changes in production or sales volume, such as raw materials and labor.

CVP Income Statement

A financial document that applies Cost-Volume-Profit analysis to delineate how changes in cost and volume affect a company's operating income and net income.

Variable Expenses

Costs that change in proportion to the activity of a business.