Bartolo Delivery has two divisions, air express and ground service, that share the common costs of the company’s communications network, which are $8,000,000 a year. You have the following information about the two divisions and the common communications network. Calls (thousands) Time on Network (hours) Air express 490,000 350,000 Ground service 210,000 1,050,000
1.What is the communications network cost that is charged to each division if the number of calls is used as the allocation basis?
2.What is the communications network cost to each division using time on network as the allocation basis?