A legal services firm processes routine documents for law, Ask an Expert

Economics

A legal services firm processes routine documents for law firm clients in Ohio and Kentucky. Since Indiana law and procedures are similar, it is considering adding clients from that state. In making this decision, the company “allocates” one-third of its existing overhead to the new Indiana “division,” since it is expected to be about one-third of the total operation.

Total company overhead (annualized, pre expansion): $9 million

Revenue minus variable costs, Kentucky/Ohio division: $12 million

Expected Indiana revenue: $6 million

Expected additional costs of Indiana division: $4 million

(a) What is the Indiana division “profit” using the company’s required allocation of costs?

(b) Is this the correct decision for the profit of the organization? What is the appropriate criteria and decision?

View complete question

Business Economics, Economics

Category:- Business Economics
Reference No.:- M91522707

Have any Question?Write your Review or question?

Related Questions in Business Economics

How are prospective payments using drgs intended to change

How are prospective payments using DRGs intended to change the incentive structure for hospitals

It has been a bad day for the stock market and you have

It has been a bad day for the stock market and you have heard that only 30% of all stocks gained value. Suppose you have a portfolio of 10 securities and assume a binomial distribution for the number of your stocks that ...

Three mutually exclusive new designs for an aircraft engine

Three mutually exclusive new designs for an aircraft engine are under consideration. The engine has a ten-year life. The first engine incurs a cost of $1.2 million for a net saving of $300,000 per annum as compared to an ...

How are rbrvs intended to work and how will the change in

How are RBRVS intended to work and How will the change in relative prices across services and procedures affect resource allocation in medical care?

1 the demand for good x is given by qxdnbsp 6000 - frac12

1. The demand for good X is given by: Q X d = 6,000 - ½ P X - P Y + 9P Z + 1/10M Research shows that the prices of related goods are given by P Y = $6,500 and P Z = $100, while the average income of the individuals ...

What is bitcoin and why does it have value is bitcoin money

What is Bitcoin and why does it have value? Is Bitcoin money? Explain why it does or does not satisfy the three conditions it must meet to be considered money.

Three friends tom jerry and mary were having coffee in the

Three friends, Tom, Jerry and Mary were having coffee in the GOSSIP CAFÉ and were discussing their job prospects. Tom told his mates that he has just resigned from his current job because he worked long hours and did not ...

Sally purchases hardwood lumber for a custom

Sally purchases hardwood lumber for a custom furniture-building shop. She uses three suppliers, Northern Hardwoods, Mountain Top, and Spring Valley. Lumber is classi ed as either clear or has defects. Sally estimates tha ...

Players of a lottery pay 1 for a ticket that lets them

Players of a lottery pay $1 for a ticket that lets them select 6 non-repeating numbers from 1 to 49. What is the probability of correctly guessing all 6 values with just one ticket?

1 explain the reason for measuring government production at

1. Explain the reason for measuring government production at cost? 2. What is the main shortcoming in valuing government production in this way?

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Business Economics Expert