The centralized employee travel department of Kensy Company has expenses of $435,000. The department has serviced a total of 4,000 travel reservations for the period

The centralized employee travel department of Kensy Company has expenses of $435,000. The department has serviced a total of 4,000 travel reservations for the period. The Northeast Division has made 1,800 reservations during the period, and the Pacific Division has made 2,200 reservations. How much should each division be charged for travel services?

Answer:

Northeast Division Service Charge for Travel Department: 

$195,750 = 1,800 billed reservations × ($435,000 ÷ 4,000 reservations) 

Pacific Division Service Charge for Travel Department: 

$239,250 = 2,200 billed reservations × ($435,000 ÷ 4,000 reservations)