The IT department allocates indirect costs to user departments on the basis of CPU time at the rate of $2000 per second. For the first quarter, the two heaviest use departments logged 900 and 1300 seconds, respectively. If the IT indirect budget for the year is $19.56 million, the percentage of this year’s allocation consumed by these departments is closest to: (a) 22.5% (b) 32% (c) 55% (d) 67%

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter9: Applications Of Cost Theory
Section: Chapter Questions
Problem 1.6CE
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The IT department allocates indirect costs to user departments
on the basis of CPU time at the rate of
$2000 per second. For the first quarter, the two heaviest
use departments logged 900 and 1300 seconds,
respectively. If the IT indirect budget for the year is
$19.56 million, the percentage of this year’s allocation
consumed by these departments is closest to:
(a) 22.5% (b) 32%
(c) 55% (d) 67%

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