Wednesday, November 16, 2011

What amount of interest costs should be allocated to the Electric Mixer Division?

ACCOUNTING

Multiple Choice

The Hassan Corporation has an Electric Mixer Division and an Electric Lamp Division. Of a $20,000,000 bond issuance, the Electric Mixer Division utilized $14,000,000 and the Electric Lamp Division utilized $6,000,000 for expansion. Interest costs on the bond totaled $1,500,000 for the year.



What amount of interest costs should be allocated to the Electric Mixer Division?

a. $450,000

b. $1,050,000

c. $4,200,000

d. $14,000,000

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