Answer (C) is correct . The amount of corporate overhead allocated to each complex is calculated below. Complex Income Percentage Allocation
One $1,000 13.33% 160
Two 1,210 16.13% 194
Three 2,347 31.29% 375
Four 1,878 25.04% 300
Five 1,065 14.21% 171
Total $7,500 100.00% $1,200 The revised profits would be as follows: Complex Original Allocation Adjusted
One $ 200+$160=360
two -90+194=104
three -253+375=122
four -522+300=-222
five -235+171=-64
Answer (A) is incorrect because Two and Three would be profitable but for the allocation of corporate overhead.
Answer (B) is incorrect because Three is contributing toward corporate overhead.
Answer (D) is incorrect because Five should also be eliminated.