Correl Company's power plant provides electricity for its two operating departments, A and B. The year 2010 budget for the power plant shows:
Required:
a. Compute the budgeted power-plant costs allocated to A and B using the single-rate method with budgeted usage as the allocation base.
b. Compute the budgeted power-plant costs allocated to A and B using the dual-rate method with actual usage as the allocation base for variable costs and budgeted usage as the allocation base for fixed costs.
c. From the standpoint of Departments A and B, what are the two main benefits of the dual-rate method?

Question

Correl Company's power plant provides electricity for its two operating departments, A and B. The year 2010 budget for the power plant shows:
     Required:
a. Compute the budgeted power-plant costs allocated to A and B using the single-rate method with budgeted usage as the allocation base.
b. Compute the budgeted power-plant costs allocated to A and B using the dual-rate method with actual usage as the allocation base for variable costs and budgeted usage as the allocation base for fixed costs.
c. From the standpoint of Departments A and B, what are the two main benefits of the dual-rate method?

Quizplus · Accepted Answer

The Answer of Correl Company's power plant provides electricity for its two operating departments, A and B. The year 2010 budget for the power plant shows:
     Required:
a. Compute the budgeted power-plant costs allocated to A and B using the single-rate method with budgeted usage as the allocation base.
b. Compute the budgeted power-plant costs allocated to A and B using the dual-rate method with actual usage as the allocation base for variable costs and budgeted usage as the allocation base for fixed costs.
c. From the standpoint of Departments A and B, what are the two main benefits of the dual-rate method?

Correl Company's Power Plant Provides Electricity for Its Two Operating