Cameron Company Has Two Major Segments with the Following Information

question 49

Essay

Cameron Company has two major segments with the following information:
$$\begin{array} { l r r r } &{ \text { East } } & \text { West } & \text { Total } \\\text { Annual revenue } & \$ 400,000 & \$ 1,200,000 & \$ 1,600,000 \\\text { Annual salesperson salaries } & 300,000 & 450,000 & 750,000 \\\text { Number of customers } & 60 & 90 & 150 \\\text { Miles driven } & 180,000 & 120,000 & 300,000\end{array}$$
The business also has overhead costs as follows:
$$\begin{array} { l r l } { \text { Cost Pool } } & \text { Cost in Pool } & \text { Cost driver } \\\text { Travel } & \$ 72,000 & \text { Number of miles driven } \\\text { Entertainment } & 288,000 & \text { Number of customers } \\\text { Administrative } & 289,000 & \text { Salaries } \\\text { Total } & \$ 649,000 &\end{array}$$
NOTE: overhead does not include salesperson salaries.
Required:
a. Determine the income of each segment if overhead costs are allocated based on sales revenue.
b. Determine the income of each segment if overhead costs are allocated using activity-based cost drivers.

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Definitions:

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