ABC Co. has a central copying facility. The copying facility has only two users, the Marketing Department and the Operations Department. The following data apply to the coming budget year: Budgeted costs of operating the copying facility for 400,000 to 600,000 copies: Fixed costs per year $120,000 Variable costs 4 cents (.04) per copy Budgeted long-run usage in copies per year: Marketing Department 160,000 copies Operations Department 340,000 copies Budgeted amounts are used to calculate the allocation rates. Actual usage for the year by the Marketing Department was 110,000 copies and by the Operations Department was 370,000 copies. ABC Co. uses a dual rate system for allocating support costs. 1. Using the dual-rate cost allocation method, what is the amount of copying facility variable costs that will be allocated to the Operations Department? 2. Using the dual-rate cost allocation method, what is the allocation rate for fixed costs? (meaning what amount of fixed costs will be allocated per unit of the cost driver? 3. Using the dual-rate cost-allocation method, what is the total amount of copying facility costs that will be allocated to the Marketing Department? Group of answer choices A. $42,800 B. $86,900 C. $96,400 D. $134,400 E. $92,400
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
ABC Co. has a central copying facility. The copying facility has only two users, the Marketing Department and the Operations Department. The following data apply to the coming budget year:
Budgeted costs of operating the copying facility for 400,000 to 600,000 copies:
Fixed costs per year $120,000
Variable costs 4 cents (.04) per copy
Budgeted long-run usage in copies per year:
Marketing Department 160,000 copies
Operations Department 340,000 copies
Budgeted amounts are used to calculate the allocation rates.
Actual usage for the year by the Marketing Department was 110,000 copies and by the Operations Department was 370,000 copies. ABC Co. uses a dual rate system for allocating support costs.
1. Using the dual-rate cost allocation method, what is the amount of copying facility variable costs that will be allocated to the Operations Department?
2. Using the dual-rate cost allocation method, what is the allocation rate for fixed costs? (meaning what amount of fixed costs will be allocated per unit of the cost driver?
3. Using the dual-rate cost-allocation method, what is the total amount of copying facility costs that will be allocated to the Marketing Department?
Group of answer choices
A. $42,800
B. $86,900
C. $96,400
D. $134,400
E. $92,400
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