Henderson Industrial Products Uses a Centralized Service Department for Procurement $\text { Construction Division }$

Henderson Industrial Products uses a centralized service department for procurement of raw materials, servicing all three of its divisions-Construction, Manufacturing, and Military. The Construction Division has been allocated a total of $192,000 of costs from the procurement department. Of that amount, $144,000 is considered traceable to the three product types within the division-Civil Construction, Residential Construction, and Commercial Construction. The traceable amounts are further allocated to the three product types within the division as shown here: $\text { Construction Division }$
$\begin{array}{|l|r|r|r|}\hline\text { Product lines } & \text { Revenues } & \text { Variable } & \text { Assigned Costs }\\&&\text { Expenses }\\\hline \text { Civil } & \$ 36,000 & \$ 24,000 & \$ 20,250 \\\hline \text { Residential } & \$ 98,000 & \$ 41,000 & \$ 40,500 \\\hline \text { Commerdal } & \$ 216,000 & \$ 60,000 & \$ 83,250 \\\hline \text { Total } & \$ 350,000 & \$ 125,000 & \$ 144,000 \\\hline\end{array}$

- The above information is used to complete a performance report, the divisional income statement, for the Construction Division. On that report, the product margin for the Residential Construction product tis:

A) $3,000
B) $16,500
C) ($8,250)
D) ($13,500)

Correct Answer:

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