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 costs of operating the copying facility
For 300,000 to 500,000 copies:

Budgeted long-run usage in copies per 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. )

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 costs of operating the copying facility
For 300,000 to 500,000 copies:

Budgeted long-run usage in copies per 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. )

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