Jamison Industries Has Three Divisions, Commercial, Retail, and Consumer, That

question 45

Essay

Jamison Industries has three divisions, commercial, retail, and consumer, that share the common costs of the company's computer server network. The annual common costs are $2,400,000. You have been provided with the following information for the upcoming year:
$$\begin{array} { | l | r | c | } \hline & \text { Cannections } & \text { Time on Netwark (haurs) } \\\hline \text { Commercial } & 60,000 & 120,000 \\\hline \text { Retail } & 80,000 & 150,000 \\\hline \text { Consumer } & 100,000 & 330,000 \\\hline\end{array}$$
Required:
(Use three decimal places in your calculations.)
a. What is the allocation rate for the upcoming year assuming Jamison uses the single-rate method and allocates common costs based on the number of connections? Calculate the allocated amount for each division.
b. What is the allocation rate for the upcoming year assuming Jamison uses the single-rate method and allocates common costs based on the time on network? Calculate the allocated amount for each division.

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Definitions:

Construction Expense

Costs directly attributed to the construction of a building or infrastructure, including materials, labor, and overhead.

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Partial Billings

The process of issuing invoices for a fraction of the total amount of a contract or project before its completion.

Gross Profit

The difference between sales revenue and the cost of goods sold (COGS), indicating the profit made before deducting operating expenses.