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:

Daily Work Activities

Routine tasks or responsibilities that are part of an individual's everyday job.

Interpersonal Skills

These refer to the ability to communicate effectively, empathize with others, and build relationships, crucial in both personal and professional settings.

Job Satisfaction

The level of contentment employees feel about their work, which can affect their performance and overall well-being.

Reduce Turnover

Strategies and practices aimed at decreasing the rate at which employees leave a company, thereby improving retention and reducing the costs associated with hiring and training new staff.