A Company Incurred $40,000 of Common Fixed Costs and $60,000

question 77

Short Answer

A company incurred $40,000 of common fixed costs and $60,000 of common variable costs.These costs are to be allocated to Departments A and B.Data on capacity provided and capacity used are as follows: $$\begin{array} { c c c } & \text { Capacity Provided } & \text { Capacity Used } \\\text { Department } & \text { in Hours } & \text { in Hours } \\\text { A } & 400 & 320 \\\text { B } & 240 & 320\end{array}$$ Assume that common fixed costs are to be allocated to Departments A and B on the basis of capacity provided and that common variable costs are to be allocated to Departments A and B on the basis of capacity used.What are the fixed and variable costs allocated to Department A?
$\begin{array}{lll}&&\text { Fixed}&\text { Variable }\end{array}$
A) $\begin{array}{lll}& \$ 20,000 & \$ 30,000 \\\end{array}$
B) $\begin{array}{lll} & \$ 20,000 & \$ 37,500 \\\end{array}$
C) $\begin{array}{lll} & \$ 25,000 & \$ 30,000 \\\end{array}$
D) $\begin{array}{lll}& \$ 25,000 & \$ 37,500\end{array}$

• A)\(\begin{array}{lll}
• & \$ 20,000 & \$ 30,000 \\\end{array}\)
• B)\(\begin{array}{lll} & \$ 20,000 & \$ 37,500 \\\end{array}\)
• C)\(\begin{array}{lll} & \$ 25,000 & \$ 30,000 \\\end{array}\)
• D)\(\begin{array}{lll}& \$ 25,000 & \$ 37,500
• \end{array}\)

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Definitions:

Network Effects

The phenomenon where the value or utility of a product or service increases as more people use it, often seen in social media platforms and online marketplaces.

Reputation Economies

Systems where the value is assigned based on the reputation of users, often found in online platforms where contributions are judged by community feedback.

Digital Natives

Individuals who have grown up with access to digital technology from an early age, making them inherently comfortable with using and adapting to new digital environments.

Horizontal Revolution

This term refers to the broad and rapid spread of information horizontally (peer-to-peer) rather than vertically (top-down) through traditional hierarchical structures, emphasizing the role of social media and networks in disseminating information.