Tenet Engineering,Inc The Following Information Is Available Concerning Various Activity Measures and the Costs

question 103

Multiple Choice

Tenet Engineering,Inc.operates two user divisions as separate cost objects.To determine the costs of each division,the company allocates common costs to the divisions.During the past month,the following common costs were incurred:
$$\begin{array} { | l | r | } \hline \text { Computer servic es ( } 85 \% \text { fixed) } & \$ 260,000 \\\hline \text { Building occupancy } & 600,000 \\\hline \text { Personnel costs } & \underline{110,000 }\\\hline \text { Total common costs } & \$ 970,000 \\\hline\end{array}$$
The following information is available concerning various activity measures and service usages by each of the divisions:

$$\begin{array} { | l | r | r | } \hline & \text { Dirision } A & \text { Division B } \\\hline \text { Area occupied (square teet) } & 20,000 & 40,000 \\\hline \text { Payroll } & \$ 380,000 & \$ 180,000 \\\hline \text { Computer time (hours) } & 200 & 220 \\\hline \text { Computer storage (megabytes) } & 4,050 & - 0 - \\\hline \text { Equipment value } & \$ 200,000 & \$ 250,000 \\\hline \text { Operating profit (pre-allocations) } & \$ 565,000 & \$ 495,000 \\\hline\end{array}$$ If common computer service costs are allocated using computer time as the allocation basis,what is the computer cost allocated to Division B?

• A) $136,190.
• B) $137,647.
• C) $144,444.
• D) $173,333.

Understand the role of manufacturing overhead in product costing and how it is allocated and adjusted.

Grasp the treatment of underapplied or overapplied overhead in financial records and the importance of proration.

Understand the components and calculation methods for inventory valuation.

Comprehend the assignment and implication of direct labor costs in job costing.

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