Answer the following question(s)using the information below:
The Fancy Flier Airplane Corporation has a central materials laboratory.The laboratory has only two users, the Large Plane Department and the Small Plane Department.The following data apply to the coming budget year:
Budgeted amounts are used to calculate the allocation rates.Actual usage for the year by the Large Plane Department was 6,000 technician hours and by the Small Plane Department was 6,500 technician hours.
-If a dual-rate cost allocation method is used, what amount of materials laboratory costs will be allocated to the Large Plane Department? Assume budgeted usage is used to allocate fixed materials laboratory costs and actual usage is used to allocate variable materials laboratory costs.
A)$782,500
B)$817,500
C)$822,500
D)$705,000
E)$996,923

Question

Answer the following question(s)using the information below:
The Fancy Flier Airplane Corporation has a central materials laboratory.The laboratory has only two users, the Large Plane Department and the Small Plane Department.The following data apply to the coming budget year:
  Budgeted amounts are used to calculate the allocation rates.Actual usage for the year by the Large Plane Department was 6,000 technician hours and by the Small Plane Department was 6,500 technician hours.
-If a dual-rate cost allocation method is used, what amount of materials laboratory costs will be allocated to the Large Plane Department? Assume budgeted usage is used to allocate fixed materials laboratory costs and actual usage is used to allocate variable materials laboratory costs.
A)$782,500 
B)$817,500 
C)$822,500 
D)$705,000 
E)$996,923

Quizplus · Accepted Answer

Using the dual-rate cost allocation method:
Fixed costs allocation rate = Budgeted fixed costs / Budgeted usage = $650,000 / 12,000 = $54.17 per technician hour.
Variable costs allocation rate = Actual variable costs / Actual usage = $195,000 / 12,500 = $15.60 per technician hour.
Allocated cost to Large Plane Department = (6,000 × $54.17) + (6,000 × $15.60) = $325,020 + $93,600 = $418,620
Allocated cost to Small Plane Department = (6,500 × $54.17) + (6,500 × $15.60) = $351,605 + $101,400 = $453,005
Therefore, the amount of materials laboratory costs allocated to the Large Plane Department is $418,620.

Answer the Following Question(s)using the Information Below