Reference no: EM131877001
Question - Packages-2-Go has two divisions, air express and ground service, that share the common costs of the company's communications network, which are $10,000,000 a year. You have the following information about the two divisions and the common communications network:
Calls (thousands) Time on
Network (hours)
Air express 240,000 200,000
Ground service 160,000 800,000
Required: Determine the cost allocation if $5,200,000 of the communications network costs are fixed and allocated on the basis of time on network, and the remaining costs, which are variable, are allocated on the basis of the number of calls.
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