The Charmatz 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 80,000 copies and by the Operations Department was 320,000 copies. If a single-rate cost-allocation method is used, what amount of copying facility costs will be budgeted for the Marketing Department? (Round any intermediary calculations to the nearest cent.)
A) $18,200
B) $6000
C) $12,200
D) $21,250

Question

The Charmatz 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 80,000 copies and by the Operations Department was 320,000 copies. If a single-rate cost-allocation method is used, what amount of copying facility costs will be budgeted for the Marketing Department? (Round any intermediary calculations to the nearest cent.)
A) $18,200 
B) $6000 
C) $12,200 
D) $21,250

Quizplus · Accepted Answer

500,000 total copies budgeted x $0.06 = $30,000 of variable cost + $61,000 of fixed cost = $91,000.
Total budged cost of $91,000/500,000 total copies is a single allocation rate of 0.18 per copy.
If the marketing department plans on making 80,000 copies, the allocated budgeted amount for copies would be 100,000 x $0.18 = $18,200.
[(100,000 / (100,000 + 400,000)) × $61,000] + (100,000 × $0.06) = $18,200

The Charmatz Corporation Has a Central Copying Facility