Ernst & Gray, CPAs Has Three Divisions: Audit, Tax, and Business

question 78

Multiple Choice

Ernst & Gray, CPAs has three divisions: audit, tax, and business consulting.When the specifications for the new computer system were established, the audit division needed 50% of the capacity, the tax division required 30%, and business consulting required 20%.The fixed computer department costs are allocated based on computer needs.The variable costs of the computer department are allocated based on the minutes of computer time that each department uses.The computer division budget for fixed costs is $450,000, and the budget for variable costs is $145,600.The company anticipates using 520,000 minutes of computer time.If the audit division uses 250,000 minutes of computer time, what amount of variable costs will be allocated to the audit division (round your intermediate calculation to two decimal places) ?

• A)$70,000
• B)$302,848
• C)$286,346
• D)$48,533

---

Definitions:

Organizational Beliefs

The shared values, principles, and norms that characterize the culture and behaviors of an organization, influencing its decision-making and practices.

Positional Power

The authority and influence that comes from the position one holds within an organization's hierarchy.

Coercive Power

A form of power based on the ability to deliver punishments or impose negative consequences to influence behavior.

Reward Power

The capability to offer rewards or positive incentives in order to influence the behavior of others or secure compliance.