Boxes-2-Go Has Two Divisions,large and Small,that Share the Common Costs

question 89

Multiple Choice

Boxes-2-Go 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: The cost accountant determined $2,700,000 of the communication network's costs were fixed and should be allocated based on the number of calls.The remaining costs should be allocated based on the time on the network.What is the total communication network costs allocated to the Large Box Division,assuming the company uses dual-rates to allocate common costs?

• A)$2,700,000.
• B)$2,520,000.
• C)$1,980,000.
• D)$1,500,000.

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Definitions:

Physical Unit Flow

A method of measuring and tracking the movement of physical units through a production process or system.

Unit Production Costs

The total cost associated with producing one unit of a product, including both direct costs like materials and labor, as well as allocated overhead.

Flow of Costs

The movement and assignment of costs through a company's production processes to its products or services.

Process Costing System

Accounting methodology used for homogeneous products, calculating costs at each stage of the manufacturing process.