Redrum Company Has Four Divisions and Allocates Central Costs to Each

question 85

Essay

Redrum Company has four divisions and allocates Central costs to each division based on one of three cost drivers as follows: $$\begin{array} { l l l l l } & \text { North } & \text { South } & \text { East } & \text { West } \\\text { Revenue } & \$ 16,250 & \$ 20,750 & \$ 14,500 & \$ 17,750 \\\text { Cost of goods sold } & 10,250 & 14,750 & 10,500 & 13,750 \\\text { Total assets } & 20,000 & 24,000 & 19,250 & 22,250\end{array}$$ Total central costs were $17,500.
Required:
Allocate the Central costs to the four divisions based on the following cost drivers:
a. revenue
b. cost of goods sold
c. total assets

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Definitions:

Composite Volcano

A type of volcano formed by alternating eruptions of lava and volcanic ash, leading to a layered structure.

Caldera

A large volcanic crater, typically formed by the collapse of land following a volcanic eruption.

Classic Shape

This term does not directly relate to a scientific concept in this context and thus is deemed not accurate.

Lava Flow

The movement of lava across the ground post-volcanic eruption, which can shape landscapes.