Tenet Engineering, Inc. operates two user divisions as separate cost objects. To determine the costs...
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Accounting
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:
Computer services (85% fixed)
$
348,000
Building occupancy
633,000
Personnel costs
133,000
Total common costs
$
1,114,000
The following information is available concerning various activity measures and service usages by each of the divisions:
Division A
Division B
Area occupied (square feet)
22,100
44,200
Payroll
$
420,000
$
220,000
Computer time (hours)
360
380
Computer storage (megabytes)
7,550
-0-
Equipment value
$
224,000
$
274,000
Operating profit (pre-allocations)
$
725,000
$
665,000
If all common costs are allocated using operating profit as the allocation basis, what is the total cost allocated to Division B (rounded to the nearest whole dollar)?
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