Reference no: EM132929992

Organic Laboratories allocates research and development costs to its three research facilities based on each facility's total annual revenue from new product developments:

 Facility location                                         Kentucky                            Arizona                Illinois                     Total

New product revenue                            $20,000,000                   $40,000,000         $40,000,000     $100,000,000

Research & Development                                                                                                              $40,000,000

Problem 1: Using revenue as an allocation base, the amount of costs allocated to the Arizona research facility is calculated to be:

Multiple Choice

Option 1: $12,000,000.
Option 2: $16,000,000.
Option 3: $16,000,000.
Option 4: $20,000,000.
Option 5: $20,000,000.