Founder Consulting Corporation Has Its Headquarters in Memphis and Operates

Founder Consulting Corporation has its headquarters in Memphis and operates from three branch offices in Nashville, Atlanta, and Louisville. Two of the company's activity cost pools are Administrative Service and Development Service. These costs are allocated to the three branch offices using an activity-based costing system. Information for next year follows: $$\begin{array} { l l l } \text { Activity Cost Pool } & \text { Activity Measure } & \text { Estimated Cost } \\\text { Adminstrative service } & \% \text { of time devoted to branch } & \$ 700,000 \\\text { Development service } & \text { Computer time } & \$ 140,000\end{array}$$ Estimated branch data for next year is as follows:
$$\begin{array} { l c r } & \text { Time to branch } & \text { Computer time } \\\text { Nashville } & 60 \% & 150,000 \text { minutes } \\\text { Atlanta } & 30 \% & 200,000 \text { minutes } \\\text { Louisville } & 10 \% & 50,000 \text { minutes } \\\text { Total } & 100 \% & 400,000 \text { minutes }\end{array}$$
- How much of the headquarters cost allocation should Nashville expect to receive next year?

A) $280,000
B) $472,500
C) $560,000
D) $504,000
E) $409,500

Correct Answer:

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