The Barton Creek Company has three client-contact departments: Market Research, Branding, and Promotion. Each department requires the services of the Legal Department for the contracts that each undertakes. The size of the Legal Department was based on long-run estimates of contracts. Information on the Legal Department's budgeted and actual costs is as follows:
The budget for the Legal Department is $300,000 + $10/contract. The budgeted volume of contracts is as follows:
$$\begin{array} { | l | r }
\hline \text { Market Research } & 300 \
\hline \text { Branding } & 500 \
\hline \text { Promotion } & 700 \
\hline
\end{array}$$
The actual number of contracts for Market Research was 315, for Branding was 450, and for Promotion was 720.
Required:
(Use three decimal places in your calculations.)
a. If a single charging rate based on budgeted usage is used, how much of the cost of the Legal Department would be allocated to each of the producing departments?
b. If a dual charging rate is used, how much of the cost of the Legal Department would be allocated to each of the producing departments?

Question

The Barton Creek Company has three client-contact departments: Market Research, Branding, and Promotion. Each department requires the services of the Legal Department for the contracts that each undertakes. The size of the Legal Department was based on long-run estimates of contracts. Information on the Legal Department's budgeted and actual costs is as follows:
The budget for the Legal Department is $300,000 + $10/contract. The budgeted volume of contracts is as follows:
 $$\begin{array} { | l | r } 
\hline \text { Market Research } & 300 \
\hline \text { Branding } & 500 \
\hline \text { Promotion } & 700 \
\hline
\end{array}$$ 
The actual number of contracts for Market Research was 315, for Branding was 450, and for Promotion was 720.
Required:
(Use three decimal places in your calculations.)
a. If a single charging rate based on budgeted usage is used, how much of the cost of the Legal Department would be allocated to each of the producing departments?
b. If a dual charging rate is used, how much of the cost of the Legal Department would be allocated to each of the producing departments?

Quizplus · Accepted Answer

The Answer of The Barton Creek Company has three client-contact departments: Market Research, Branding, and Promotion. Each department requires the services of the Legal Department for the contracts that each undertakes. The size of the Legal Department was based on long-run estimates of contracts. Information on the Legal Department's budgeted and actual costs is as follows:
The budget for the Legal Department is $300,000 + $10/contract. The budgeted volume of contracts is as follows:
 $$\begin{array} { | l | r } 
\hline \text { Market Research } & 300 \
\hline \text { Branding } & 500 \
\hline \text { Promotion } & 700 \
\hline
\end{array}$$ 
The actual number of contracts for Market Research was 315, for Branding was 450, and for Promotion was 720.
Required:
(Use three decimal places in your calculations.)
a. If a single charging rate based on budgeted usage is used, how much of the cost of the Legal Department would be allocated to each of the producing departments?
b. If a dual charging rate is used, how much of the cost of the Legal Department would be allocated to each of the producing departments?

The Barton Creek Company Has Three Client-Contact Departments: Market Research