Markov Engineering Has Three Divisions,commercial,retail,and Consumer,that Share the Common Costs

question 45

Essay

Markov Engineering has three divisions,commercial,retail,and consumer,that share the common costs of the company's computer server network.The annual common costs are $2,400,000.You have been provided with the following information for the upcoming year: $$\begin{array} { | l | r | r | } \hline & \text { Connections } & \begin{array} { r } \text { Time on } \\\text { Network (hous) }\end{array} \\\hline \text { Commercial } & 60,000 & 120,000 \\\hline \text { Retail } & 80,000 & 150,000 \\\hline \text { Consumer } & 100,000 & 330,000 \\\hline\end{array}$$
Required (use three decimal places in your calculations):
The cost accountant determined $1,800,000 of the server network's costs were fixed and should be allocated based on the number of connections.The remaining costs should be allocated based on the time on the network.What is the total server network costs allocated to each division?

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Definitions:

Equity Financing

The method of raising capital by selling company shares to investors in return for ownership stakes in the company.

Debt-equity Ratio

A financial ratio that gauges a corporation's leverage by dividing its total obligations by its stockholders' equity.

Sustainable Rate

A Sustainable Rate often refers to the growth rate at which a company can continue to grow without needing to increase financial leverage.

Capital Budgeting

The process by which a business evaluates and selects long-term investments that are consistent with the firm's goal of maximizing owner wealth.