Answer the following questions using the information below:
The Bonawitz Corporation has a central copying facility. The copying facility has only two users, the Marketing Department and the Operations 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 Marketing Department was 40,000 copies and by the Operations Department was 180,000 copies.
-If a single-rate cost-allocation method is used, what amount of copying facility costs will be allocated to the Marketing Department? Assume budgeted usage is used to allocate fixed copying costs and actual usage is used to allocate variable copying costs.
A) $8,400
B) $9,000
C) $6,000
D) $4,800
E) $6,655

Question

Answer the following questions using the information below:
The Bonawitz Corporation has a central copying facility. The copying facility has only two users, the Marketing Department and the Operations 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 Marketing Department was 40,000 copies and by the Operations Department was 180,000 copies.
-If a single-rate cost-allocation method is used, what amount of copying facility costs will be allocated to the Marketing Department? Assume budgeted usage is used to allocate fixed copying costs and actual usage is used to allocate variable copying costs.
A) $8,400 
B) $9,000 
C) $6,000 
D) $4,800 
E) $6,655

Quizplus · Accepted Answer

Step 1: Calculate the total actual copying facilities costs
 $24,700 + $0.03 x 220,000 = $30,100
 ($24,700 is the fixed cost and $0.03 is the variable cost per copy)
Step 2: Calculate the total budgeted copies
 10,000 + 200,000 = 210,000
Step 3: Calculate the allocation rate
 $30,100 / 210,000 = $0.1438 per copy
Step 4: Allocate the cost to the Marketing Department
 $0.1438 per copy x 40,000 copies = $5,752
Therefore, the amount of copying facility costs allocated to the Marketing Department using a single-rate cost-allocation method is $6,000 (rounded to the nearest dollar).

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