ABC Corporation Has Three Service Departments with the Following Costs

question 120

Multiple Choice

ABC Corporation has three service departments with the following costs and activity base: ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information are as follows:
What will the income of the Micro Division be after all service department allocations?

• A) $305,000
• B) $650,000
• C) $345,000
• D) $610,000

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Definitions:

Total Revenue

The total amount of money received by a firm from sales of its products or services, before any expenses are subtracted.

Variable Costs

Costs that vary directly with the level of production or output, such as raw materials and labor expenses.

Short Run

In economics, a period during which at least one factor of production is fixed and cannot be changed, limiting adjustments to changes in demand or technology.

Average Total Cost

The total cost of production (fixed and variable costs) divided by the number of units produced, indicating the cost per unit of output.