The printing department supplies copy and printing support for both Departments A and B and has prepared its total budget using the following information for next year: $$\begin{array} { l c }
\text { Fixed costs } & \$ 100,000 \
\text { Available capacity } & 4,000,000 \text { pages } \
\text { Budgeted usage: } & \
\quad \text { Department A } & 1,200,000 \text { pages } \
\quad \text { Department B } & 2,400,000 \text { pages } \
\text { Variable cost } & \$ 0.03 \text { perpage }
\end{array}$$ Assume that the single rate method of cost allocation is used and the allocation base is budgeted usage. How much photocopying cost will be allocated to Department B using budgeted costs and usage?
A) $72,000
B) $122,000
C) $132,000
D) $138,667

Question

The printing department supplies copy and printing support for both Departments A and B and has prepared its total budget using the following information for next year: $$\begin{array} { l c } 
\text { Fixed costs } & \$ 100,000 \
\text { Available capacity } & 4,000,000 \text { pages } \
\text { Budgeted usage: } & \
\quad \text { Department A } & 1,200,000 \text { pages } \
\quad \text { Department B } & 2,400,000 \text { pages } \
\text { Variable cost } & \$ 0.03 \text { perpage }
\end{array}$$ Assume that the single rate method of cost allocation is used and the allocation base is budgeted usage. How much photocopying cost will be allocated to Department B using budgeted costs and usage?
A) $72,000
B) $122,000
C) $132,000
D) $138,667

Quizplus · Accepted Answer

The total budgeted cost is $100,000 (fixed) + (4,000,000 pages x $0.03 per page variable) = $132,000. The allocation rate is $132,000/4,000,000 pages = $0.033 per page. The photocopying cost allocated to Department B is 2,400,000 pages x $0.033 per page = $79,200.

The Printing Department Supplies Copy and Printing Support for Both