Sumner Corporation Has Four Divisions, Commercial, Retail, Research, and Consumer

Essay

Sumner Corporation has four divisions, commercial, retail, research, and consumer, that share the common costs of the company's computer server network. The annual common costs are $3,500,000. You have been provided with the following information for the upcoming year:
$$\begin{array} { | l | r | c | } \hline & \text { Connections } & \text { Time on Network (hours) } \\\hline \text { Cormmercial } & 70,000 & 120,000 \\\hline \text { Retail } & 90,000 & 150,000 \\\hline \text { Research } & 20,000 & 100,000 \\\hline \text { Consumer } & 100,000 & 330,000 \\\hline\end{array}$$
Required:
(Use three decimal places in your calculations.)
a. What is the allocation rate for the upcoming year assuming Sumner uses the single-rate method and allocates common costs based on the number of connections?
b. What is the allocation rate for the upcoming year assuming Sumner uses the single-rate method and allocates common costs based on the time on network? Calculate the allocated amount for each division.