Waverley Services Has Three Divisions, Commercial, Retail, and Consumer, That

Essay

Waverley Services has three divisions, commercial, retail, and consumer, that share the common costs of the company's computer server network. The annual common costs are $1,200,000. You have been provided with the following information for the upcoming year:
$$\begin{array} { | l | r | c | } \hline & \text { Connections } & \text { Time on Network (hours) } \\\hline \text { Commercial } & 30,000 & 120,000 \\\hline \text { Retail } & 40,000 & 150,000 \\\hline \text { Consumer } & 50,000 & 290,000 \\\hline\end{array}$$
Required:
a. What is the allocation rate for the upcoming year assuming Waverley uses the single-rate method and allocates common costs based on the number of connections? Calculate the allocated amount for each division.
b. What is the allocation rate for the upcoming year assuming Waverley uses the single-rate method and allocates common costs based on the time on network? (Do not round rate - carry out six decimal places.) Calculate the allocated amount for each division.
c. The cost accountant determined $850,000 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 each division? (Round immediate calculations to three decimal places.)