Tenet Engineering,Inc.operates two user divisions as separate cost objects.To determine the costs of each division,the company allocates common costs to the divisions.During the past month,the following common costs were incurred:

\begin{array} { | l | r | } \hline \text { Computer servic es ( } 85 \% \text { fixed) } & \$ 260,000 \\\hline \text { Building occupancy } & 600,000 \\\hline \text { Personnel costs } & \underline{110,000 }\\\hline \text { Total common costs } & \$ 970,000 \\\hline\end{array}

The following information is available concerning various activity measures and service usages by each of the divisions:

\begin{array} { | l | r | r | } \hline & \text { Dirision } A & \text { Division B } \\\hline \text { Area occupied (square teet) } & 20,000 & 40,000 \\\hline \text { Payroll } & \$ 380,000 & \$ 180,000 \\\hline \text { Computer time (hours) } & 200 & 220 \\\hline \text { Computer storage (megabytes) } & 4,050 & - 0 - \\\hline \text { Equipment value } & \$ 200,000 & \$ 250,000 \\\hline \text { Operating profit (pre-allocations) } & \$ 565,000 & \$ 495,000 \\\hline\end{array}

If common computer service costs are allocated using computer time as the allocation basis,what is the computer cost allocated to Division B?
A) $136,190.
B) $137,647.
C) $144,444.
D) $173,333.

Bonanza Co

Multiple Choice

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