Organic Laboratories Allocates Research and Development Costs to Its Three

question 110

Multiple Choice

Organic Laboratories allocates research and development costs to its three research facilities based on each facility's total annual revenue from new product developments: $\begin{array}{ll}\text { Facility location }&\text { Kentucky }&\text { Arizona }&\text { Illinois }&\text { Total }\\\text { New product }\\\text { revenue }&\$56,000,000&\$100,000,000&\$84,000,000&\$240,000,000\\\text { Research \& }\\(\text { Development }&&&&\$60,000,000\\\end{array}$
Using revenue as an allocation base, the amount of costs allocated to the Kentucky research facility is calculated to be:

• A) $24,000,000.
• B) $18,000,000.
• C) $9,000,000.
• D) $14,000,000.
• E) $26,000,000.