Barrington Box Enterprises Has Two Divisions,large and Small,that Share the Common

question 14

Multiple Choice

Barrington Box Enterprises has two divisions,large and small,that share the common costs of the company's communications network.The annual common costs are $4,500,000.You have been provided with the following information for the upcoming year:
$$\begin{array} { | l | r | r | } \hline & \text { Calls } & \begin{array} { r } \text { Time on } \\\text { Network (hous) }\end{array} \\\hline \text { Large } & 100,000 & 120,000 \\\hline \text { Small } & 80,000 & 330,000 \\\hline\end{array}$$ What is the allocation rate for the upcoming year,assuming Barrington Box uses the single-rate method and allocates common costs based on the number of calls?

• A) $10.00.
• B) $15.00.
• C) $20.00.
• D) $25.00.

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Definitions:

Bond Issuance Costs

These are expenses that a company incurs when it issues bonds, including legal, accounting, and underwriting fees.

Premium Amortization

The process of gradually expensing the premium paid above a bond's face value over the remaining life of the bond.

Effective-interest Method

The effective-interest method is a technique used in amortizing the discount or premium on bonds payable, where the interest expense recorded over time corresponds to the bond's carrying value.

Interest Expense

Interest expense is the cost incurred by an entity for borrowed funds, recognized on the income statement.