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Mesa Telcom has three divisions, commercial, retail, and consumer, that share the common cost of the company's computer server network. The annual...
Mesa Telcom has three divisions, commercial, retail, and consumer, that share the common cost
of the company's computer server network. The annual common costs are $3,220,000. You have been provided with the following information for the upcoming year:
Connections Time on Network (hours)
Commercial 58,000 164,000
Retail 64,000 237,000
Consumer 110,000 399,000
The cost accountant determined $2,300,000 of the server network's costs were fixed and should be
allocated based on the number of connections. The remaining costs should be allocated based on the time on the network. What is the total server network costs allocated to the Commercial Division, assuming the company uses dual-rates to allocate common costs?
