Mesa Telcom Has Three Divisions, Commercial, Retail, and Consumer, That

question 53

Multiple Choice

Mesa Telcom 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:
$$\begin{array} { | l | r | r | } \hline & \text { Connections } &{ \text { Time on Network (hours) } } \\\hline \text { Commercial } & 60,000 & 120,000 \\\hline \text { Retail } & 80,000 & 150,000 \\\hline \text { Consumer } & 100,000 & 330,000 \\\hline\end{array}$$
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Mesa Telcom uses the single rate method and allocates common costs based on the time on the network. What is the total computer server network cost allocated to the Retail Division?

• A) $429,000.
• B) $600,000.
• C) $657,800.
• D) $3,000,000.

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Definitions:

Blu-Ray Disc Rentals

The service of lending Blu-Ray discs, which contain high-definition movies or other content, to customers for a temporary period.

Rental Price

The cost paid to rent a property or equipment for a specified period of time.

Market Equilibrium

A market scenario in which the equilibrium between demand and supply results in stable prices.

Incentive

Anything that offers rewards to people to change their behavior.