The Conity Corporation has an Electric Mixer Division and an Electric Lamp Division. Of a $ 13 comma 000 comma 000 bond issuance, the Electric Mixer Division used $ 9 comma 500 comma 000 and the Electric Lamp Division used $ 3 comma 500 comma 000 for expansion. Interest costs on the bond totaled $ 975 comma 000 for the year. What amount of interest costs should be allocated to the Electric Lamp Division? (Round any intermediary calculations two decimal places and your final answer to the nearest dollar.)

Question

Luke Summers

Business

21 July, 03:15

The Conity Corporation has an Electric Mixer Division and an Electric Lamp Division. Of a $ 13 comma 000 comma 000 bond issuance, the Electric Mixer Division used $ 9 comma 500 comma 000 and the Electric Lamp Division used $ 3 comma 500 comma 000 for expansion. Interest costs on the bond totaled $ 975 comma 000 for the year. What amount of interest costs should be allocated to the Electric Lamp Division? (Round any intermediary calculations two decimal places and your final answer to the nearest dollar.)

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Answers (1)

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Ashly Wise · Answer 1

Bond payable ratio:

Electric Mixer Division = 9,500,000 / 13,000,000 = 73%

Electric Lamp division = 3,500,000 / 13,000,000 = 27%

Interest Expesens Allocated to Electric Lamp Division = 975,000*27% = $263250