The Cleveland power plant that services all manufacturing depariments of MidWest Engineering has a budget for the corming year. This budget has been expressed in the following nonthly terms: E (Click the icon to view the budgeted data.) The expected monthly costs for operating the power plant during the budget year are $25,900: $14,000 variable and $11,900 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 praclical 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.) (a) (b) Budgeled rate per hour: Livonia Warren Dearborn Westland Total Requirement 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? Begin by calculating the budgeted amounts that will be allocated to each manufacturing department. Variable Fixed Total - X Budgeted rate per hour: Data table Livonia Manufacturing Department Needed at Practical Capacity Production Level (Kilowatt-Hours) Average Expected Monthly Usage (Kilowatt-Hours) Warren Dearbom Livonia 12,000 17,000 Westland Warren 25,000 15,000 Dearborn 15,000 19,000 Total 18,000 19,000 Westland Why might you prefer the dual-rate method? 70,000 70,000 Total
The Cleveland power plant that services all manufacturing depariments of MidWest Engineering has a budget for the corming year. This budget has been expressed in the following nonthly terms: E (Click the icon to view the budgeted data.) The expected monthly costs for operating the power plant during the budget year are $25,900: $14,000 variable and $11,900 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 praclical 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.) (a) (b) Budgeled rate per hour: Livonia Warren Dearborn Westland Total Requirement 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? Begin by calculating the budgeted amounts that will be allocated to each manufacturing department. Variable Fixed Total - X Budgeted rate per hour: Data table Livonia Manufacturing Department Needed at Practical Capacity Production Level (Kilowatt-Hours) Average Expected Monthly Usage (Kilowatt-Hours) Warren Dearbom Livonia 12,000 17,000 Westland Warren 25,000 15,000 Dearborn 15,000 19,000 Total 18,000 19,000 Westland Why might you prefer the dual-rate method? 70,000 70,000 Total
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The Cleveland power plant that services all manufacturing depariments of MidWest Engineering has a budget for the corming year. This budget has been expressed in the following nonthly terms:
E (Click the icon to view the budgeted data.)
The expected monthly costs for operating the power plant during the budget year are $25,900: $14,000 variable and $11,900 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
praclical 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.)
(a)
(b)
Budgeled rate per hour:
Livonia
Warren
Dearborn
Westland
Total
Requirement 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?
Begin by calculating the budgeted amounts that will be allocated to each manufacturing department.
Variable
Fixed
Total
- X
Budgeted rate per hour:
Data table
Livonia
Manufacturing
Department
Needed at Practical Capacity
Production Level (Kilowatt-Hours)
Average Expected Monthly
Usage (Kilowatt-Hours)
Warren
Dearbom
Livonia
12,000
17,000
Westland
Warren
25,000
15,000
Dearborn
15,000
19,000
Total
18,000
19,000
Westland
Why might you prefer the dual-rate method?
70,000
70,000
Total
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