The Conity Corporation has an Electric Mixer Division and an Electric Lamp Division. Of a $ 15 comma 000 comma 000 bond issuance, the Electric Mixer Division used $ 9 comma 300 comma 000 and the Electric Lamp Division used $ 5 comma 700 comma 000 for expansion. Interest costs on the bond totaled $ 1 comma 000 comma 000 for the year. What amount of interest costs should be allocated to the Electric Mixer Division? (Round any intermediary calculations two decimal places and your final answer to the nearest dollar.)

Question

Business

Litzy Harper

31 October, 02:30

The Conity Corporation has an Electric Mixer Division and an Electric Lamp Division. Of a $ 15 comma 000 comma 000 bond issuance, the Electric Mixer Division used $ 9 comma 300 comma 000 and the Electric Lamp Division used $ 5 comma 700 comma 000 for expansion. Interest costs on the bond totaled $ 1 comma 000 comma 000 for the year. What amount of interest costs should be allocated to the Electric Mixer Division? (Round any intermediary calculations two decimal places and your final answer to the nearest dollar.)

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Answers (1)

Know the Answer?

Holly Mcconnell · Answer 1

Amount allocated = $620,000

Explanation:

As per the data given in the question,

Bond issuance = $15,000,000

Electric mixer division used = $9,300,000

Electric lamp division used = $5,700,000

Interest cost on the bond = $1,000,000

Electric mixer division = Electric mixer division used : Bond issuance

= $9,300,000 : $15,000,000

=0.62

So, Allocated interest expense = Interest cost on the bond * Electric mixer division

= $1,000,000 * 0.62

= $620,000