The Cincinnati power plant that services all manufacturing departments of Eastern Mountain Engineering has a budget for the coming year. This budget has been expressed in the following monthly terms: (Click the icon to view the budgeted data.) The expected monthly costs for operating the power plant during the budget year are $20,000: $8,000 variable and $12,000 fixed. Read the requirements. Requirement 1. Assume that a single cost pool is used for the power plant costs. What budgeted amounts will be allocated to each manufacturing department if (a) the rate i calculated based on practical capacity and costs are allocated based on practical capacity and (b) the rate is calculated based on expected monthly usage and costs are allocated based on expected monthly usage? (Round the budgeted r to the nearest cent.) Budgeted rate per hour: Loretta Bentley Melboum Eastmoreland Total (a) C Requirements 1. Assume that a single cost pool is used for the power plant costs. What budgeted amounts will be allocated to each manufacturing department if (a) the rate is calculated based on practical capacity and costs are allocated based on practical capacity and (b) the rate is calculated based on expected monthly usage and costs are allocated based on expected monthly usage? - X 2. Assume the dual-rate method is used with separate cost pools for the variable and fixed costs. Variable costs are allocated on the basis of expected monthly usage. Fixed costs are allocated on the basis of practical capacity. What budgeted amounts will be allocated to each manufacturing department? Why might you prefer the dual-rate method?
The Cincinnati power plant that services all manufacturing departments of Eastern Mountain Engineering has a budget for the coming year. This budget has been expressed in the following monthly terms: (Click the icon to view the budgeted data.) The expected monthly costs for operating the power plant during the budget year are $20,000: $8,000 variable and $12,000 fixed. Read the requirements. Requirement 1. Assume that a single cost pool is used for the power plant costs. What budgeted amounts will be allocated to each manufacturing department if (a) the rate i calculated based on practical capacity and costs are allocated based on practical capacity and (b) the rate is calculated based on expected monthly usage and costs are allocated based on expected monthly usage? (Round the budgeted r to the nearest cent.) Budgeted rate per hour: Loretta Bentley Melboum Eastmoreland Total (a) C Requirements 1. Assume that a single cost pool is used for the power plant costs. What budgeted amounts will be allocated to each manufacturing department if (a) the rate is calculated based on practical capacity and costs are allocated based on practical capacity and (b) the rate is calculated based on expected monthly usage and costs are allocated based on expected monthly usage? - X 2. Assume the dual-rate method is used with separate cost pools for the variable and fixed costs. Variable costs are allocated on the basis of expected monthly usage. Fixed costs are allocated on the basis of practical capacity. What budgeted amounts will be allocated to each manufacturing department? Why might you prefer the dual-rate method?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The Cincinnati power plant that services all manufacturing departments of Eastern Mountain Engineering has a budget for the coming year. This budget has been expressed in the following monthly terms:
(Click the icon to view the budgeted data.)
The expected monthly costs for operating the power plant during the budget year are $20,000: $8,000 variable and $12,000 fixed.
Read the requirements.
Requirement 1. Assume that a single cost pool is used for the power plant costs. What budgeted amounts will be allocated to each manufacturing department if (a) the rate is calculated based on practical
capacity and costs are allocated based on practical capacity and (b) the rate is calculated based on expected monthly usage and costs are allocated based on expected monthly usage? (Round the budgeted rate
to the nearest cent.)
Budgeted rate per hour:
Loretta
Bentley
Melboum
Eastmoreland
Total
(a)
C…
Requirements
1. Assume that a single cost pool is used for the power plant costs. What budgeted amounts will be allocated to each
manufacturing department if (a) the rate is calculated based on practical capacity and costs are allocated based on practical
capacity and (b) the rate is calculated based on expected monthly usage and costs are allocated based on expected
monthly usage?
-
2. Assume the dual-rate method is used with separate cost pools for the variable and fixed costs. Variable costs are allocated on
the basis of expected monthly usage. Fixed costs are allocated on the basis of practical capacity. What budgeted amounts will
be allocated to each manufacturing department? Why might you prefer the dual-rate method?
X
Transcribed Image Text:Data table
Manufacturing
Department
Loretta
Bentley
Melboum
Eastmoreland
Total
Needed at Practical Capacity
Production Level (Kilowatt-Hours)
13,000
21,000
14,000
32,000
80,000
Average Expected Monthly
Usage (Kilowatt-Hours)
10,000
9,000
10,000
11,000
40,000
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