Use the information below to answer the following question(s).Data Source Media manufactures cassettes and CDs in separate divisions utilizing one plant location.The following data have been prepared for review.
-What is the total cost per hour of use for the Cassette Division assuming budgeted usage is the allocation base and a single-rate method is used?
A)$1,050.00
B)$600.00
C)$982.98
D)$382.98
E)$360.00

Question

Use the information below to answer the following question(s).Data Source Media manufactures cassettes and CDs in separate divisions utilizing one plant location.The following data have been prepared for review. 
-What is the total cost per hour of use for the Cassette Division assuming budgeted usage is the allocation base and a single-rate method is used?
A)$1,050.00 
B)$600.00 
C)$982.98 
D)$382.98 
E)$360.00

Quizplus · Accepted Answer

To calculate the total cost per hour of use for the Cassette Division, we need to first calculate the total overhead costs for the plant location and then allocate them to the Cassette and CD divisions based on their usage.

Total overhead costs = $1,177,500 + $352,500 = $1,530,000

Using the single-rate method, we allocate the total overhead costs based on the budgeted usage of each division:

Cassette Division: $1,012,500 / 1,030,000 hours = $0.98298 per hour
CD Division: $517,500 / 860,000 hours = $0.60233 per hour

Therefore, the total cost per hour of use for the Cassette Division is $0.98298, which is option C.

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