Use the information below to answer the following question(s).
Data Source Media manufactures cassettes and CDs. Management is attempting to set the budget for the coming year. Two divisions (Cassette and CD) of the company utilize one plant location. The following data have been prepared for review.

-What is the cost per hour of use for the Cassette department and the CD Department assuming budgeted usage is the allocation base and a single-rate method is used?
A) $960.00
B) $600.00
C) $982.98
D) $1,021.28
E) $1,582.98

Question

Use the information below to answer the following question(s).
Data Source Media manufactures cassettes and CDs. Management is attempting to set the budget for the coming year. Two divisions (Cassette and CD) of the company utilize one plant location. The following data have been prepared for review.
 
-What is the cost per hour of use for the Cassette department and the CD Department assuming budgeted usage is the allocation base and a single-rate method is used?
A) $960.00 
B) $600.00 
C) $982.98 
D) $1,021.28 
E) $1,582.98

Quizplus · Accepted Answer

To calculate the cost per hour of use for each department, we need to first calculate the total budgeted cost and total budgeted usage for each department.

For the Cassette department:
Total budgeted cost = $1,100,000
Total budgeted usage = 1,000
Cost per hour of use = Total budgeted cost / Total budgeted usage
= $1,100,000 / 1,000
= $1,100 per hour

For the CD department:
Total budgeted cost = $1,650,000
Total budgeted usage = 1,500
Cost per hour of use = Total budgeted cost / Total budgeted usage
= $1,650,000 / 1,500
= $1,100 per hour

Since a single-rate method is used, the cost per hour of use is the same for both departments, and it is $1,100 per hour. Therefore, the correct answer is C.

Use the Information Below to Answer the Following Question(s)