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Question - Bartolo Delivery has two divisions, air express and ground service, that share the common costs of the company's communications network, which are $8,100,000 a year. You have the following information about the two divisions and the common communications network:
Calls (thousands)
Time on Network (hours)
Air express
574,000
352,500
Ground service
246,000
1,057,500
Required - Determine the cost allocation if $5.67 million 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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