Cleveland College recently leased a photocopy machine for $1,500 per month plus $0.04 per copy. Additional variable operating costs were $0.02 per copy. Cleveland College estimated it would produce a total of 30,000 copies per month. The Physics Department estimated it would produce 6,000 copies, but actually produced only 4,000 copies. If fixed and variable cost pools are allocated separately, then the amount of fixed costs allocated to the Physics Department should be:
A) $360
B) $300
C) $200
D) $240

Question

Quizplus · Accepted Answer

The fixed cost of $1,500 per month should be allocated based on the estimated usage. The Physics Department estimated 6,000 copies out of a total estimated 30,000 copies, which is 20% of the total. Therefore, 20% of $1,500 is $300.

Cleveland College Recently Leased a Photocopy Machine for $1,500 Per