Santa Fe Industries Has Two Divisions, Marketing and Finance, That

Essay

Santa Fe Industries has two divisions, Marketing and Finance, that share the common costs of the company's communications network. The annual common costs are $2,250,000. You have been provided with the following information for the upcoming year:
$$\begin{array} { | l | r | c | } \hline & \text { Calls } & \text { Time on Network (hours) } \\\hline \text { Marketing } & 50,000 & 120,000 \\\hline \text { Finance } & 40,000 & 330,000 \\\hline\end{array}$$
Required:
(Use three decimal places in your calculations.)
a. What is the allocation rate for the upcoming year assuming Santa Fe uses the single-rate method and allocates common costs based on the number of calls? Calculate the costs allocated to each division.
b. What is the allocation rate for the upcoming year assuming Santa Fe uses the single-rate method and allocates common costs based on the time on the network? Calculate the costs allocated to each division.