A Company Incurred $120,000 of Common Fixed Costs and $180,000

question 21

Multiple Choice

A company incurred $120,000 of common fixed costs and $180,000 of common variable costs.These costs are to be allocated to Departments XX and YY.Data on capacity provided and capacity used are as follows: Assume that both fixed and variable costs are allocated on the basis of capacity used.The fixed and variable costs allocated to Department XX are

• A) $75,000 $112,500
• B) $75,000 $90,000
• C) $60,000 $112,500
• D) $60,000 $90,000

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Definitions:

Growth Rate

The percentage increase in a company's revenue or earnings from one period to the next, demonstrating how quickly it is expanding.

Market Price

The amount for which something can be sold on a given market at a specific point in time.

Cost of Equity

The earnings a firm needs to determine whether an investment satisfies its capital return criteria, commonly utilized in the process of capital budgeting.

Cost of Equity

The return a company is required to generate for its shareholders, often estimated using the Capital Asset Pricing Model (CAPM).