What is the allocation rate for the upcoming year assuming Boxes-2-Go uses the single-rate method and allocates common costs based on the time on the network?
A)$10.98
B)$10.00
C)$8.00
D)$7.14

Question

Quizplus · Accepted Answer

Using the single-rate method, we add up all the common costs and divide them by the total time on the network for all three products.

Total common costs = $50,000
Total time on network for all products = 5,000 hours

Allocation rate = Total common costs / Total time on network for all products
Allocation rate = $50,000 / 5,000 hours
Allocation rate = $10/hour

So, the allocation rate for the upcoming year is $10/hour.

Using this allocation rate and the time on the network for each product, we can allocate the common costs to each product.

Boxes-2-Go: 2,000 hours x $10/hour = $20,000
File-It: 1,000 hours x $10/hour = $10,000
Ship-It: 2,000 hours x $10/hour = $20,000

Therefore, the allocation rate for Boxes-2-Go would be $10.00.

What Is the Allocation Rate for the Upcoming Year Assuming