Brandon Consulting Company is headquartered in Atlanta and has branch offices in Nashville and Birmingham.Brandon uses an activity-based costing system.The Atlanta office has its costs for Administration and Legal allocated to the two branch offices.Brandon has provided the following information: How much of Atlanta's cost will be allocated to Nashville?
A)$628,500
B)$663,500
C)$670,400
D)$665,300

Question

Brandon Consulting Company is headquartered in Atlanta and has branch offices in Nashville and Birmingham.Brandon uses an activity-based costing system.The Atlanta office has its costs for Administration and Legal allocated to the two branch offices.Brandon has provided the following information:  How much of Atlanta's cost will be allocated to Nashville?
A)$628,500 
B)$663,500 
C)$670,400 
D)$665,300

Quizplus · Accepted Answer

To calculate the cost allocated to Nashville, we need to use the activity-based costing system. 
From the table provided, we can see that the total overhead costs for the Atlanta office are $6,285,000. 
Out of this, $3,000,000 is allocated to Administration and $750,000 is allocated to Legal. 
Using the cost driver rates provided, we can calculate the cost for each branch. 
For Nashville, the cost for Administration is: 
400 * $100 = $40,000 
For Legal, the cost is: 
1,800 * $50 = $90,000

Therefore, the total cost allocated to Nashville is: 
$40,000 + $90,000 = $130,000

Adding this to the fixed costs allocated equally to both branches ($2,000,000 / 2 = $1,000,000), we get: 
$1,000,000 + $130,000 = $1,130,000

Finally, we need to add the cost allocated for Legal from the Atlanta office: 
$1,130,000 + $533,500 = $1,663,500

So, the answer is B.

Brandon Consulting Company Is Headquartered in Atlanta and Has Branch