The Document Creation Center (DCC)for Alegis Corp.provides photocopying and document services for three departments in the St.Paul office.The following budget has been prepared for the year. If DCC uses a dual rate for allocating its costs based on usage,how much cost will be allocated to the Software Development Department?
A)$98,000.
B)$104,000.
C)$112,000.
D)$118,857.

Question

The Document Creation Center (DCC)for Alegis Corp.provides photocopying and document services for three departments in the St.Paul office.The following budget has been prepared for the year.  If DCC uses a dual rate for allocating its costs based on usage,how much cost will be allocated to the Software Development Department?
A)$98,000. 
B)$104,000. 
C)$112,000. 
D)$118,857.

Quizplus · Accepted Answer

Using the dual rate method, the variable cost per unit for photocopying is $0.04 and the variable cost per unit for document services is $0.08. The Software Development Department is estimated to use 30,000 photocopies and 10,000 document services, for a total of $2,200 (30,000 x $0.04) + ($0.08 x 10,000) + $98,000 = $112,000. Therefore, the cost allocated to the Software Development Department is $112,000.